act - sierra leone · no. 6 the banking act 2019 no. 6 the banking act 2019 short title. no. 6 2019...

THE BANKING ACT, 2019

ARRANGEMENT OF SECTIONS

Section.

PART 1–PRELIMINARY1. Interpretation. 2. Application.3. Companies Act, 2009.4. Conflict or inconsistency.5. Objective and functions of the Central Bank.

PART II- LICENSING6. Eligibility to apply for a licence.7. Application for licence. 8. Grant or refusal of licence. 9. Revocation of licence.10. Restriction of licence.11. Restriction on use word 'bank'12. Display of banking licence.13. Powers regarding unauthorised banking business.14. Repayment of monies by unauthorised persons15. Minimum paid up capital.16. Permissible activities.17. Opening, closing, relocation, appointment and dismissal.18. Representative office. 19. Approval required for appointments.20. Qualification for appointment.21. Disclosure of interest.

PART III - CORPORATE GOVERNANCE22. Corporate governance rules.

PART IV - REGISTRATION OF A FINANCIAL HOLDING COMPANY23. Financial holding companies not to function without licence registration.24. Restrictions on activities of financial holding companies.25. Registration of financial holding company.26. Withdrawal of registration by Central Bank.

PART V - CAPITAL AND RESERVES27. Capital adequacy. 28. Additional capital.29. Capital adequacy on consolidated basis.30. Statutory reserve fund.31. Restrictions on declaration and payment of dividend.

PART VI - LIQUIDITY32. Maintenance of liquid assets.33. Local asset.

PART VII - OWNERSHIP AND CONTROL 34. Reporting of Group structures35. Acquisition, sale, disposal, or merger. 36. Acquisition of shares in small and medium scale industries or business.

PART VIII - RESTRICTIONS ON LENDING37. Limits on exposure to single person or group.38. Exposure limits on a consolidated basis.39. Restrictions on transactions with an affiliate.40. Restriction on purchase or transfer of certain assets from affiliates and

insiders. 41. Restrictions on inter-institutional placements.42. Restrictions on exposures to insiders and their related interests.43. Limits on exposures to insiders on a consolidated basis.44. Requirements for lending to insiders and their related interests.45. Restrictions on lending to employees.46. Restriction on establishment of subsidiary company.47. Limits on investment in respect of subsidiary companies.48. Restrictions on exposure and investment. 49. Regulation of credit exposures.50. Asset classification, provisioning and write-offs.51. Open foreign exchange positions.52. Power to impose prudential limits.

PART IX - SUPERVISION AND CONTROL 53. Regulations, directives, and guidelines.54. Information and periodic returns.55. Power of investigation and examination.56. Access to records.57. Verification of information.58. Examination report.

ACTSupplement to the Sierra Leone Gazette Vol. CXLX, No. 51

dated 27th June, 2019

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59. Resolvability assessments, ex-ante resolution plans and follow-up60. Confidentiality. 61. Mutual cooperation in exchange of confidential information.62. Power to take action.63. Appointment of advisor.64. Sanctions against errant chief executives, etc.65. Prompt corrective action for adequately capitalised banks and financial

holding companies. 66. Prompt corrective action for undercapitalised banks and financial holding

companies.67. Prompt corrective action for significantly undercapitalised banks and

financial holding companies

PART X - RESOLUTION OF BANKS AND FINANCIAL HOLDING COMPANIES68. Resolution authority.69. Decision by Central Bank to place in resolution.70. Central Bank to manage and control affairs of banks or financial holding

companies in resolution.71. Restructuring, including merger, transfer and sale. 72. Mandatory restructuring of liabilities and shares.73. Claims of affected persons.

PART XI - OFFICIAL ADMINISTRATION.74. Official administrator.75. Powers of official administrator.76. Central Bank oversight of official administrator.77. Moratorium and effect of official administration on proceedings78. Third party rights or obligations.79. Inventory and plan of action to bank.80. Capital increase by existing shareholders.81. Removal of directors and key management personnel82. Misconduct by Shareholders, directors, etc.83. Expenses of the official administrator.84. Termination of official administration.85. "No creditor worse off" rule.86. Costs of resolution.87. Review of resolution decisions of Central Bank.

PART XII - RECEIVERSHIP AND LIQUIDATION88. Appointment of receiver.89. Qualification and compensation of receiver.

90. Notice and registration of receivership.91. Central Bank oversight of receiver.92. Powers of receiver.93. Effects of receivership94. Taking control of bank in receivership.95. Inventory of assets and new financial position.96. Repudiation of contracts.97. Avoidance of pre- receivership transfers. 98. Obligations of lessors of bank premises and utility providers.99. Protection of payment, clearing, and settlement systems.

100. Determination of claims. 101. Claims relating to eligible financial contracts.102. Priorities in payment of claims.103. Final report of receiver to Central Bank.104. Relationship with other enactments. 105. Miscellaneous receivership provisions.106. Voluntary winding up.

PART XIII - ACCOUNTS AND AUDIT107. Maintenance of accounting records.108. Financial statements.109. Display of financial statements. 110. Guidelines on accounting standards111. External Auditor112. Special audit.113. External auditor's report114. Meeting with external auditor.115. Termination of external auditor's appointment.

PART XIV - MISCELLANEOUS 116. Review of decisions of Central Bank.117. Offences.118. Maintenance.119. Publication of data by Central Bank.120. Immunity of Central Bank.121. Abandoned property.122. Minimum uniform business hours and bank holiday.123. Civil proceedings.124. Schedule of penalties.125. Repeal and savings.

No. 6 The Banking Act 2019No. 6 The Banking Act 2019

Short title.

No. 6 2019

Sierra Leone

The Banking Act, 2019

Being an Act to provide for the licensing of persons carryingon banking business, the regulation and supervision of bankingactivities, financial holding companies and subsidiaries, theprotection of depositors and to provide for other related matters

[ ]

ENACTED by the President and Members of Parliament in thispresent Parliament assembled.

Date of com-mencement.

SIGNED this 17th day of June, 2019.

HIS EXCELLENCY JULIUS MAADA BIO,President.

LS

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PRINTED AND PUBLISHED BY THE GOVERNMENT PRINTING DEPARTMENT, SIERRA LEONE. GAZETTE NO.51 OF 27TH JUNE, 2019.

Passed in Parliament this 31st day of May, in the year of our Lord twothousand and Ninteen.

PARAN UMAR TARAWALLYClerk of Parliament.

THIS PRINTED IMPRESSION has been carefully compared by me with the Billwhich has passed Parliament and found by me to be a true and correct printed copyof the said Bill.

PARAN UMAR TARAWALLYClerk of Parliament.


PART I – PRELIMINARY

1. In this Act, unless the context otherwise requires -

"administrative penalty" includes -

(a) fines, including interest, payable to theCentral Bank under this Act,

(b) the removal from office of any director,officer or employee by the Central Bank;

(c) withdrawal of any privilege normallyaccorded to banks or financial holdingcompanies by the Central Bank;

(d) withdrawal of a "fit and proper" person’sstatus previously accorded by the CentralBank; or

(e) such other sanctions as the Central Bank may by regulations, directives or guidelinesprescribe;

"advisor" means a person appointed by a written orderfrom the Central Bank to advise the chief executiveof a bank or financial holding company;

"affiliate" means-

(a) a body corporate of which the bank orfinancial holding company is a subsidiary;

(b) a subsidiary of the bank or financial holdingcompany; or

(c) a body corporate which is controlled by thesame entity which controls a bank or afinancial holding company.

"agent" means a person that is engaged by a bank ora financial holding company to provide specificfinancial services on its behalf or a person that isengaged by the Central Bank to provide specificservices;

"applicant" means a body corporate;

"associate" means a body corporate over which a bankor financial holding company has the power toparticipate in its financial or operating decisions butwhich does not control or jointly control itsgovernance policy;

"bail-in" means write-down of the liabilities of a bankor conversion into equity with-out the consent ofshareholders or creditors and specifically excludesinsured and secured claims;

"bank" means a body corporate licensed by the CentralBank to carry on banking business in accordancewith this Act;

"banking business'' or the business of bankingincludes-

(a) accepting deposits from the public,repayable on demand or otherwise, andwithdrawable by cheque, draft, order, or byany other means;

(b) the financing whether in whole or in part or by way of short, medium or long term loansor advances; or

(c) any other financial activities prescribed bythe Central Bank;

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Interpretation.


"beneficial owner" means a person or body corporatethat enjoys the benefit of ownership even thoughthe title of the property owned is in another name;

"branch" means an office of a bank that is notseparately incorporated through which a bank maybe permitted to engage in banking business;

"bridge bank" means temporary national bankestablished to take ownership of part or all of aninstitution to bridge the lapse between failure andfinal resolution;

"bridge institution" is an institution established bythe government or the Central Bank for a temporaryperiod for the purpose of resolving a bank in off-icial administration, or to an asset managementvehicle established by thegovernment for thepurpose of acquiring, managing, and disposing ofproblem assets of a bank as part of the resolutionof the bank;

"capital base" means the sum of tier 1 capital andeligible amount of tier 2 capital, prescribed by theCentral Bank;

"capital adequacy ratio" means the ratio expressed asa percentage of the adjusted capital base to the riskweighted financial exposure;

"capitalised expenditure" includes preliminaryexpenses, share selling commission, brokeragelosses incurred by the bank and any other item ofexpenditure not represented by tangible assets;

"Central Bank" means the Bank of Sierra Leone;

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"chief executive" means a person who is responsible,subject to the authority of the Board of directors ofa body corporate, for the conduct and managementof the day to day business of that body corporate;

"close relative" means spouse, son, daughter, step son,step daughter, brother, sister, father, mother, cousin,nephew, niece, aunt, uncle, step sister, step brother,grandparent or grandchild;

"control" "controlling shares" or "shareholding" meana relationship wherein a person or a group of personsacting in concert, directly or indirectly-

(a) owns 50% or more of the voting shares of abody corporate;

(b) has power to appoint or remove the majorityof the Board of directors of a body corporate;

(c) has the ability to exert a significant influenceon the management or policies of the bodycorporate; or

(d) has the ability to direct the activities of thebody corporate as to affect the financialreturns on any investment made with suchbody corporate;

"Court" means a Court of competent jurisdiction;

"credit exposure" means the amount at risk from a claimor transaction of a bank, whether on or off-balancesheet, and whether contingent or actual, includingextensions of credit facilities, credit openings, lettersof credit, credit commitments, advances, guarantees,acceptances, debt securities, as well as investmentsby a bank;


"corporate group" means a company and the affiliatesor associates of that company;

"deposit" means a sum of money paid on terms underwhich it will be repaid, with or without interest or apremium, and either on demand or at an agreed timeunder the legal and contractual conditions applicableand not referable to the provision of property orservices or the giving of security;

"Deposit Protection Fund" means a deposit protectionfund set up to provide for the accumulation offinancial contributions from banks and branchoffices of foreign banks for eventual compensationof deposits held in banks and branch offices offoreign banks and for their management;

"director" in relation to a bank, includes a personcarrying out or empowered to carry outsubstantially the same functions as thosecarried out by a director of a company registeredunder the Companies Act, 2009 or a director of acooperative society registered under the CooperativeSocieties Act, 1977;

"direction" means a legally binding directive of theCentral Bank issued to a specific bank, all banks,financial holding company, or any particular groupthereof, in the implementation of this Act;

"emolument" means salaries and allowances other thanperformance related earnings;

"employee" means staff of a bank or financial holdingcompany;

"examination" includes the carrying out of on-site,off- site, credit reporting and any other examinationas may be determined by the Central Bankincluding the Anti-MoneyLaundering Act, 2012 orany other law;

"executive officer" means-

(a) the chief executive officer, chief financialofficer, chief operating officer, chief risk officer,chief internal auditor, chief complianceofficer, and chief accounting officer of a bank;and

(b) any other person who participates or hasauthority to participate in major policy makingor functions of the bank, whether or not suchperson has an official title or receives com-pensation for such actions, and is desig-nated as an executive officer by the CentralBank;

"exempted persons' means persons to whom therestrictions on the conduct of banking business anddeposit-taking does not apply including friendlysocieties whose total deposits remain less than anamount prescribed by the Central Bank;

"financial exposure" in relation to a bank or financialholding company or with respect to a person means,the aggregate of the loans, advances, placements,and credit facilities including off-balance sheetobligations given to that person, and the value ofthe holdings by that bank or financial holdingcompany of shares and debentures and other debtsecurities issued by that person;

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"financial holding company" means a body corporateor an entity that confirms and controls a bank;

"financial company" means a person, including a bankthat primarily engages in one or more of thepermissible banking activities referred to in section16 and any other activities as prescribed by thecentral bank;

"financial group" means a bank, financial holdingcompany, financial company and its subsidiaries,affiliates and associates, as the case may be;

"finance leasing" means a contract between two partieswhereby a lessor gives the lessee possession anduse of a specific asset (or portfolio of assets) inconsideration for payment of rentals over a givenperiod in which the lessor retains ownership or titlewith the intention to transfer ownership of theseassets to the lessee upon termination of the financelease;

"fit and proper person" means a person who is suitableto hold the particular position which that personholds or is to hold with regard to -

(a) the probity, competence and soundness ofjudgment of the person for purposes offulfilling the responsibilities of that position;

(b) the diligence with which that person fulfilsor is likely to fulfil those responsibilities;

(c) whether the interest of depositors or potentialdepositors of the entity are threatened, orlikely to be, in any way threatened by theperson holding that position;

(d) the integrity and the qualifications andexperience of the person are appropriate forthe position in the light of the business planand activities of the entity which the personserves, or is likely to serve, taking into accountthe size, nature and complexity of theinstitution; and

(e) any other criteria that may be stipulated bythe Central Bank;

"financial institution" means an institution subject toregulation and supervision by the Central Bank underthis Act or any other enactment;

"financial services" means any service, includingbanking business, prescribed as such by the CentralBank;

"foreign bank" means a bank licensed in anothercountry;

"foreign financial holding company" means a financialholding company registered or authorised in anothercountry;

"foreign supervisory authority" means the relevantsupervisory authority in the country where theforeign bank has its principal place of business;

"home supervisory authority" means the supervisoryauthority in the country in which the bank or financialholding company is licensed or registered;

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"independent director" means a director who is free ofmanagement and shareholders influence and whosejudgment will be exercised for the sole benefit of thebankorfinancial holding company and who has noperceived or actual conflict of interest arising fromrelationshipswith thebank, financial holdingcompany and with bank and financial holdingcompany-related parties whether present, past orfuture and other relevant facts and circumstances;

"insider" means a director, key management personnel,all other employees or significant shareholder of abankor financial holding company;

"insolvent or insolvency" means a bank or financialholding company that is unable to meet itsobligations as they fall due or the value of its liabilitiesexceeds the value of its assets;

"key management personnel" includes the chiefexecutive, deputy chief executive, chief operatingofficer, chief finance officer, board secretary, treasurer,chief internal auditor, the chief risk officer, the headof compliance, the head of anti-money launderingfunctions, the head of internal control functions, chieflegal officer, chief technical officer, manager of asignificant business unit of a bank, or financialholding company or any person with similarresponsibilities;

"licence" means an authorisation granted by CentralBank to a body corporate for the purpose of carryingout banking business;

"management letter" means a formal letter from theauditor addressed to a financial institution on theweaknesses identified in the operations of thatfinancial institution during the audit;

"minimum paid-up capital" includes-

(a) initial funds required to start-up a bank; and

(b) the operational start-up costs,as may beprescribed by the Central Bank but excludesexpenses incurred in employing capital;

"money" means any regulated and generally acceptedmedium of financial exchange, as prescribed by theCentral Bank, which can be used as a legal tender forthe repayment of debt; a store of purchasing power,

a standard of value and a unit of accounting measure;

"net-own funds" means the sum total of share capitalthat has been -

(a) paid-up;

(b) free reserves but excludes revaluationreserves; and

(c) the statutory reserve fund subject to nettingout accumulated losses, goodwill andunwritten-off capitalised expenditureincluding pre-operating expenses anddeferred tax;

"non-financial company" means a person thatprimarily engages in commercial, industrial or ag-ricultural activities;

"non-interest banking" means the practice of bankingbusiness in conformity with Islamic finance;

"non-performing asset" means a credit exposure orasset classified as non-performing by the CentralBank;

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"non-preferential" means upon terms no morefavourable than those which would be offeredunder prevailing conditions to all clients andcustomers of a bank or financial holding com-pany;

"official administrator" means a person appointed bythe Central Bank to carry out official administrationof a bank or financial holding company as prescribedunder this Act;

"off balance sheet transactions" includes contingentassets, contingent liabilities in the form of letters ofcredit,guarantees, bids, bonds and indemnities;

"paid-up capital" includes minimum capital, additionalfully paid-upshares, and the capitalisation of incomesurplus;

"person" includes an individual, a body corporate orassociation of body of persons whether or notincorporated;

"prescribe" means prescribed by regulations, rules,directives or guidelines issued by the Central Bank;

"place of business" means any branch, agency, office,outlet, cash point, mobile office, or booth of a bankthat is open to the public;

"public interest" includes a right or advantage whichensures or is intended to ensure the general benefitof the people of Sierra Leone;

"purchase and assumption" means an agreement inwhich a part or -the whole of the assets of the fail-edbank are purchased and all or some of the liabilitiesare assumed by an acquiring bank;

"receivership" means the process of revoking thecharter of a failing bank and appointing a receiver-

(a) to continue with the closing function of afailed institution;

(b) to liquidate the failed institution's remainingassets; and

(c) to distribute any proceeds of the liquidationto the Central Bank, to the failed institution'scustomers who had uninsured depositamounts, to general creditors, and to otherswith approved claims;

"resolution" means the process of -

(a) valuing a failing institution;

(b) marketing the failing institution to healthyinstitutions;

(c) soliciting and accepting bids for the sale ofsome or all of the institution's assets andassumption of deposits (including someliabilities);

(d) determining which bid is least costly to thedeposit insurance fund; and

(e) working with the assuming institutionthrough the closing process (or ensuring thepayment of insured deposits in the eventthere is no acquirer);

"related person" means a bank or financial holdingcompany's subsidiaries, affiliates and any partyincluding-

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(a) their subsidiaries, affiliates and specialpurpose entities that the bank or financialholding company exerts control over or thatexerts control over the bank or financialholding company;

(b) the bank or financial holding company'scontrolling shareholders, Board Members,senior management and key staff and theirdirect or related interests; and

(c) their close relatives as well as correspondingpersons in affiliated companies;

"representative office" in relation to a bankincorporated overseas means premises from whichthe banking business or other financial activity ofthe overseas bank are promoted in any way;

"registration" means an authorisation granted by aCentral Bank to a financial holding companypursuant to this Act;

"regulation" means a legally binding directive adoptedby the Central Bank and applied to all banks in theimplementation of this Act;

"resident non-executive director" means non-executive director residing in Sierra Leone;

"significant shareholding" means a direct or indirectholding in a bank or financial holding company whichrepresents 5% or more of -

(a) the paid-up capital;

(b) the voting rights; or

(c) which makes it possible to exercise asignificant influence over the managementof the bank or financial holding company inwhich a holding subsists;

"significantly under-capitalised" means a capitalposition that is less than 50% of the capital adequacyratio requirements prescribed by the Central Bank;

"statutory reserve fund" means the statutory reservefund required to be maintained by a bank or financialholding company under subsection (1) of section30;

"subsidiary" means a body corporate over whichanother body corporate has control;

"Tier 1 Capital" means permanent shareholders' equityin the form of issued and fully paid-up shares plusall disclosed reserves, perpetual non-cumulativepreference shares and retained earnings, lessgoodwilland any other intangible assets, as may beprescribed by the Central Bank;

"Tier 2 Capital" means general provisions which areheld against future and current unidentified lossesand are freely available to meet losses whichsubsequently materialize, and includes subordinateddebt, cumulative and redeemable preferred stock,revaluation reserves on fixed assets, and any otherform of capital, as prescribed by the Central Bank;

"under-capitalised" means any capital position belowthe Minimum Capital Adequacy Ratio requirement;and

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No. 6 The Banking Act 2019No. 6 The Banking Act 201916 17

"unsecured advances or credit facilities" means-

(a) loans or credit facilities made withoutsecurity,

(b) part of loans or credit facilities made in excessof the market value of the security pledged;or

(c) loans or credit facilities which the CentralBank deems that no market value exists forthe security pledged.

2. This Act shall apply to -

(a) banks;

(b) financial holding companies; and

(c) subsidiaries, branches and the overseasoperations of banks and financial holdingcompanies.

3. (1) This Act shall be read together with the CompaniesAct, 2009 (Act No. 5 of 2009).

(2) The Companies Act, 2009 shall not be derogated fromexcept expressly provided for in this Act.

4. Where there is conflict or inconsistency between this Act and any other Act, this Act shall prevail.

5. (1) The Central Bank shall be the sole body responsiblefor the licensing, supervision, regulation and resolution of banksincluding-

(a) all matters relating to deposit-taking of banksand financial holding companies; and

(b) the responsibility for promoting the safetyand soundness of the financial system andprotecting the interests of depositors.

(2) The Central Bank shall have all functions, powers andduties imposed on it by this Act.

PART II- LICENSING

6. A person shall not be eligible to apply for a licence to carryout the business of banking or otherwise solicit deposits from thepublic in Sierra Leone unless he is a limited liability company -

(a) incorporated under the laws of SierraLeone;

(b) registered under the laws of Sierra Leoneas a subsidiary of a foreign bank.

7. (1) A person who wishes to engage in the business ofbanking or otherwise solicit deposits from the public in Sierra Leoneshall apply to the Central bank to be licensed for that purpose.

(2) An application for a licence under subsection (1), shallbe made in writing to the Central Bank and shall be in the form thatthe Central Bank may prescribe and shall be accompanied by-

(a) evidence of payment of the prescribed non-refundable application fee;

(b) a certified true copy of the applicant's -

Application.

CompaniesAct, 2009.

Conflict orinconsistency.

Objective andfunctions ofthe CentralBank.

Eligibility toapply for alicence.

Applicationfor licence.


(i) certificate of incorporation in the caseof companies incorporated under thelaws of Sierra Leone or certificate ofregistration in the case of companiesregistered under the laws of SierraLeone as a subsidiary of a foreign bank;

(ii) Memorandum and Articles of Ass-ociation; and

(ii) any other relevant document requiredby the Central Bank;

(c) the names, address, occupation of personswho would hold significant shares, directlyor indirectly, in the proposed bank and therespective values of such shares, as well asthose of their corporate affiliates;

(d) a complete organisational structure of thegroup including all direct and indirectaffiliates and associates of the applicant andthe nature of their relationship to the groupwhere the applicant is or will be a member ofa corporate group;

(e) particulars of the directors or personsconcerned with the management of theproposed bank, including their background,certified financial position, business interestsand performance of the business u n d e rtheir control or management;

(f) feasibility reports including business planand financial projections for the first 5 years,audited financial statements and a n n u a lreports for the past 2 years;

(g) the authorised capital, including the amountsthat have been paid up;

(h) a list of proposed significant shareholdersstating their names, addresses and respectiveshares;

(i) an affidavit disclosing the name, nationality,place of residence, business and professionalhistory for the past 10 years, and auditedfinancial statements for the past 3 years ifapplicable for each person who would be adirector, executive officer or significantshareholder of the proposed bank;

(j) evidence of any conviction by a court of lawfor offenses punishable by imprisonment orinvolving fraud or dishonesty;

(k) any personal bankruptcy filings, suspensionof payments to or compounding withcreditors;

(l) evidence of any disqualifications orsuspensions by a competent authority frompracticing a profession;

(m) evidence of any past or present involvementin a managerial function of a body corporateor other undertaking that is or has beensubject to insolvency proceedings;

(n) evidence of any removal from the positionof director or executive officer at any bank orother financial company ordered by acompetent authority;

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(o) the written approval of a relevant CentralBank in a foreign country or territoryconfirming that it exercises global con-solidated supervision over the bank in thecase of an applicant whose principal placeof business is in another country; and

(p) such other particulars as the Central Bankmay require.

(3) An application may be withdrawn by notice in writingby the applicant at any time before its approval.

(4) An applicant shall provide the Central Bank withparticulars of any changes in the information provided to CentralBank under this Section as soon as the applicant becomes aware ofsuch change.

(5) In determining an application under subsection (1),the Central Bank shall take into account, amongst other things, thefollowing -

(a) whether the significant and controllingshareholders, beneficial owners, directors andkey management personnel or proposeddirectors and proposed key managementpersonnel of the applicant are fit and properpersons;

(b) the extent to which the legal, operational,managerial and ownership structure of anapplicant and its financial group could hindereffective supervision;

(c) whether the applicant meets the prescribedminimum paid-up capital;

(d) the sources and legitimacy of the applicant'sminimum capital;

(e) the financial position and financial historyof the applicant; and

(f) whether the interest of potential depositorswill be detrimentally affected by the manner of the applicant's corporate governancearrangements including accounting, riskmanagement, internal control systems andrecords.

(6) A person who transacts banking business without avalid licence under this Act commits an offence and is liable onconviction to imprisonment for a term not exceeding 10 years or to afine which is equivalent to twice the amount of deposits collected incontravention of this Act or to both.

(7) The Central Bank may instruct a person whocontravenes subsection (1) to immediately terminate any deposit-taking activities and repay the funds so raised.

(8) Where the Central Bank has reasonable grounds tobelieve that a person has contravened subsection (1), it may, under awarrant issued by a Magistrate, enter any premises and examine thebooks, accounts and records of that person and take copies of orextracts from any documents or records examined.

(9) A person who intentionally obstructs the Central Bankin the exercise of the powers conferred by subsection (7) or (8) commitsan offence and is liable on conviction to a fine.

8. (1) The Central Bank may grant or refuse an applicationfor a licence under section 8 based on its assessment of -

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Grant orrefusal oflicence.


(a) the character and fitness of the directors andexecutive officers or proposed directors andproposed executive officers of the applicant;

(b) the identity, financial resources andreputation of existing or proposed significantshareholders of the applicant;

(c) the adequacy of the applicant's capitalstructure in relation to the nature and scaleof the proposed banking business;

(d) the financial position and financial history ofthe applicant;

(e) the quality of the applicant's risk mana ge-ment, internal controls and internal andexternal audit systems;

(f) the likely conduct of the affairs of theapplicant in relation to the interests ofdepositors,

(g) the extent to which the proposed corporate structure of the applicant and its affiliatesmay hinder the effective supervision andregulation of the bank; and

(h) the impact on the banking system moregenerally of the issuance of the licence.

(2) In addition to the criteria outlined in subsection (1),where the applicant is a subsidiary of a foreign bank, the CentralBank may grant a licence under section 7 where -

(a) the home Central Bank issues a statement tothe Central Bank indicating that -

(i) it has consented to the establishmentof a subsidiary in Sierra Leone by theforeign bank; and

(ii) it is satisfied with the prudential andoverall financial management of theforeign bank;

(b) the Central Bank is satisfied as to the natureand scope of the supervision exercised bythe home Central Bank, includingconsolidated global supervision.

(3) A licence granted under subsection (1) shall-

(a) be in writing;

(b) be valid for such period as may be specifiedby the Central Bank;

(c) not be transferable;

(d) be subject to such terms and conditions asthe Central Bank may specify, includingrestrictions regarding the nature and extentof activities in which the bank may beengaged; and

(e) such fee, including an additional fee for latepayment as may be prescribed by the CentralBank.

(4) The Central Bank shall communicate its preliminarydecision to grant or refuse an application for a licence under section8 within 90 days and its final decision not later than 180 days from thedate of receipt of complete information.

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(5) Where the Central Bank grants or refuses anapplication for a licence under subsection (1) it shall give notice inwriting to the applicant-

(a) of the grant; or

(b) in the case of a refusal, the reasons for itsdecision.

(6) Where a person is dissatisfied or aggrieved with adecision of the Central Bank under paragraph (b) of subsection (5)may petition the Central Bank in writing for a review within 10 days ofthe decision.

(7) The Central Bank shall publish a list of all personslicensed under this Act, including its branches and subsidiaries.

9. (1) The Central Bank may revoke a licence granted underparagraph (a) of subsection (5) section 8 if it is satisfied that -

(a) the licensee has failed to fulfill or comply withthe terms and conditions stipulated in thelicence;

(b) the licensee has failed to comply with anyobligation imposed on it by this Act;

(c) the licensee has provided false, misleadingor inaccurate information in connection withan application for a licence;

(d) the interests of depositors or potentialdepositors are threatened, whether by themanner in which the licensee is conductingor proposes to conduct its affairs or for anyother reason;

(e) the licensee has become insolvent;

(f) the licensee has failed to raise its capital to the levels necessary to rectify its significantunder-capitalisation or its financial positioncontinues to deteriorate before the end ofthe periods specified in paragraph (a) ofsubsection (1) of Section 67;

(g) the licensee or person in the seniormanagement, in a situation where the crimeis committed with the acquiescence of thelicensee is convicted of money launderingand terrorist financing activities or any otherfinancial crime;

(h) the licensee has failed to commence businesswithin 6 months from the date of the licence;

(i) the licensee has ceased to carry onbusiness; or

(j) any serious crime.

(2) Where in the case of a subsidiary of a foreign bank, itappears to the Central Bank that the home Central Bank has withdrawnits consent required to be issued under subparagraph (i) of paragraph(a) of subsection (2) of section 8, the Central Bank may-

(a) restrict transactions between the bank andthe financial holding company; or

(b) revoke the licence of the subsidiary foreignbank.

(3) Where the Central Bank revokes a licence grantedunder section 8 the Central Bank shall-

24 25

Revocationof licence.


(a) place the bank or financial holding companyin receivership.

(b) immediately publish notice of the revocationof the licence on its website or any othermedia that may be deemed appropriate;

(c) immediately notify the Deposit ProtectionFund of the revocation of licence of a bankor financial holding company.

10. (1) The Central Bank may restrict, instead of revoking alicence, where it is satisfied that notwithstanding the grounds onwhich its power to revoke a licence is exercisable but thecircumstances are not such as to justify revocation.

(2) The Central Bank may, in restricting a licence undersubsection (1), impose conditions-

(a) requiring the licensee to refrain from pursuinga particular course of action or to restrict thescope of its business in a particular way;

(b) limiting the acceptance of deposits, thegranting of credit, the making of investments,or the opening of subsidiaries or branchesby the licensee;

(c) prohibit the licensee from soliciting fordeposits;

(d) prohibit the licensee from entering into anyother transaction or class of transactions;

(e) require the removal or replacement of anydirector, manager or other officer of thelicensee;

(f) such other conditions as it considersappropriate.

(3) The duration of the restriction of a licence imposedby the Central Bank under subsection (1) shall not exceed 2 yearsfrom the date on which it was imposed.

(4) Where the Central Bank restricts a licence undersubsection (1), the Central Bank shall notify the licensee of therestriction in writing indicating that the licensee may, within 30days, make representation in opposition to the restriction to theCentral Bank.

(5) Where a licensee fails to comply with the requirementundersubsection (2) or contravenes any provision under this sectionthe Central Bank may revoke the licence or impose such otheradministrative penalty as may be appropriate.

11. (1) A person other than a bank licensed under this Actshall not use or continue to use the word 'bank' or any of itsderivatives either in English, French or any other language in thedescription or title under which the person is carrying on business.

(2) A person shall not be granted or continue to hold alicence under a name which so closely resembles the name of theholder of an existing licence as is likely, in the opinion of the CentralBank, to mislead the public.

(3) This section shall not apply to -

(a) financial holding companies which operateas a bank; and

(b) any registered association of banks, financialholding companies, banks and financialholding companies' employees formed for theprotection and advancement of their mutualinterest or in furtherance or promotion ofeducation and training of personnel forfinancial companies.

26 27

Restrictionof licence.

Restrictionon use ofword 'bank'.


(4) A person who contravenes this section commits anoffence and is liable on conviction to imprisonment for a term notexceeding 10 years or to a fine which is equivalent to twice the amountof deposits received in the contravention or to both fine andimprisonment.

12. (1) A licensee shall display conspicuously at its headoffice and branches or office of its agent, copies of its banking licenceor registration for the information of the public.

(2) Where a licensee fails to comply with the requirementunder subsection (1) the Central Bank may impose such administrativepenalty as may be appropriate.

13. (1) The Central Bank may inspect or cause to beinspected, the records of any person if it has reasonable grounds tosuspect that the person is carrying out the business of bankingwithout a valid banking licence issued under this Act.

(2) Upon carrying out the inspection if it is found thatthere is evidence to prove that the business of banking was carriedout partly or wholly without a licence, the inspecting officials mayseize the relevant records to facilitate prosecution.

14. (1) Where the Central Bank is satisfied that a person has accepted deposits in contravention of section 13, the Central Bankshall direct that person to repay all the deposits obtained and allprofits accruing to that person or assets acquired as a result of theillegally obtained monies or deposits, including any interest or otheramounts which may be owed by that person in respect of thosedeposits or monies-

(a) to the respective persons from whom depositshave been obtained;

(b) in the manner and in accordance with theinstruction of the Central Bank; and

(c) within the period of time imposed by theCentral Bank.

(2) A person who refuses or fails to comply with adirective under subsection (1), shall be deemed to be unable to payits debts, or adjudged bankrupt and the Central Bank may appoint aliquidator.

15. (1) The Central Bank shall prescribe the minimum paid-up capital requirements for banks and financial holding companies.

(2) A bank or financial holding company shall, pursuantto subsection (1), -

(a) maintain a minimum paid-up capital asprescribed by the Central Bank;

(b) submit to the Central Bank additional fundsto address the deficiency in the capital, whereits minimum paid-up capital has beenimpaired by way of losses.

(3) A bank or financial holding company who fails tocomply with this section is liable to administrative penalty.

16. (1) A bank shall not carry on any other businesses except-

(a) acceptance of deposits and other repayablefunds from the public;

(b) lending;

(c) financial leasing;

(d) hire purchase

(e) investment in financial securities excludingcapital instruments for their own account;

28 29

Display ofbankinglicence.

Powersregardingunauthorisedbankingbusiness.

Repaymentof monies byunauthorisedpersons.

Minimumpaid upcapital.

Permissibleactivities.


(f) money transmission services;

(g) issuing and administering means of paymentincluding debit cards, traveler's cheques andbanker's drafts

(h) guarantees and commitments -

(i) trading on own account or for accountof customers in -

(i) money market instruments;(ii) foreign exchange;(iii) transferable securities;

(j) participating in securities issues andprovision of services related to suchactivities;

(k) advice to undertakings on capital structure, acquisition and merger of undertakings;

(l) portfolio management and advice;(m) keeping and administering securities;(n) credit reference services; (0) safe custody services; (p) non-interest banking;(q) digital financial services; and(r) such other services as may be prescribed by

the Central Bank .

(2) The Central Bank may by notification restrict thepermissible activities of banks in general, any class of banks or anyindividual bank or remove the restriction so imposed as it may deemnecessary and appropriate.

(3) A bank shall seek prior written approval of the CentralBank to introduce products that are derived from the permissibleactivities specified under paragraphs (p) and (q) of subsection (1).

(4) A bank which fails to comply with this section is liableto an administrative penalty.

17. (1) A bank shall not open, close, relocate its head officeor branch unless on prior written approval of the Central Bank.

(2) A bank shall not appoint, suspend or dismiss an agentwhich carries out banking business on its behalf without a no objectionfrom the Central Bank.

(3 A bank licensed under this Act may with prior writtenapproval of the Central Bank carry on banking business outside SierraLeone only through a separately capitalised subsidiary company orrepresentative office.

(4) A bank or financial holding company who contravenesthis section is liable to an administrative penalty.

18. (1) A bank or financial holding company incorporatedoutside Sierra Leone shall not set up a representative office in SierraLeone unless it has obtained the written approval of the CentralBank.

(2) An application to setup a representative office undersubsection (1), shall be made to the Central Bank in such form as maybe prescribed and shall contain such information and supported bysuch documents as the Central Bank may require, including permissionfrom the home Central Bank.

(3) A representative office shall not transact bankingbusiness in Sierra Leone.

30 31

Opening,closing,relocation,appointmentand dismissal.

Representativeoffice.


(4) A person who contravenes this section is liable to anadministrative Penalty.

19. (1) A bank or financial holding company shall notappoint–

(a) chief executive or deputy chief executive;

(b) executive director or deputy executivedirector;

(c) Board member or key management personnel;

(d) agent who carries on banking business onits behalf; or

(e) any other officer as the Central Bank maydetermine,

unless prior written approval of the Central Bank is obtained.

(2) Where there is any change in the appointment of thechief executive, deputy chief executive, executive director, Boardmember, key management personnel, agent and any other officerunder subsection (1), the bank or financial holding company shallpromptly notify the Central Bank.

(3) A chief executive, deputy chief executive, executivedirector and any other officer that the Central Bank may determine, ofa bank or financial holding company shall after the appointment residein Sierra Leone

20. (1) A person shall not be appointed chief executive,deputy chief executive, executive director, Board member, keymanagement personnel, agent or other officer of a bank or financialholding company if he -

(a) is certified by a medical practitioner to be aperson of unsound mind;

(b) has been declared insolvent for 7 years orhas entered into agreement with anotherperson for payment of the debt of that personand has suspended payment of the debt;

(c) is convicted of an offence involving fraud ordishonesty;

(d) has been a Director or key managementpersonnel of any institution that has beenliquidated otherwise than for voluntaryreasons or has had its licence revoked;

(e) is under the age of 18 years;

(f) is a Director or board member of another bankor financial holding company, unless thatperson has obtained written approval of theCentral Bank;

(g) is declared not to be a fit and proper personby the Central Bank;

(h) has been removed from office by the Central Bank; or

(i) has been banned by a professionalbody to which the person belongs.

(2) A bank or financial holding company that becomesaware of circumstances that may disqualify a chief executive, deputychief executive, executive director, director, Board member or keymanagement personnel, agent or other officer concerned in themanagement of that bank or financial holding company shallimmediately notify the Central Bank.

32 33

Approvalrequired forappointments.

Qualificationfor appoint-ment.


(3) Where a person is subject to disqualification underthis section he shall immediately cease to hold office or act as suchand the bank or financial holding company concerned shallimmediately terminate his appointment.

(4) A person who, at any time during the preceding 12months, has served in a management position with the central bankshall not serve as a director or executive officer of a bank or financialholding company, without obtaining the prior approval of the CentralBank.

(5) A governor, deputy governor or director of the CentralBank shall not serve as a director or executive officer of a bank orfinancial holding company, during the one-year period immediatelyfollowing the date on which the person ceased to occupy the positionwith the central bank.

(6) A person who has been a director or has been directlyor indirectly concerned in the management of a bank who has had itslicence revoked in accordance with this Act shall not serve as adirector of another bank or financial holding company without theexpress approval of the Central Bank.

(7) Except with the consent of the Central Bank, no bankor financial holding company incorporated in Sierra Leone shall haveas a director a person who is a director of another bank.

(8) A person who on the date of the coming into operationof this Act is an executive officer or director of a bank or financialholding company shall not, within 30 days after the coming intooperation of this Act remain an executive officer or director of thatbank unless the person satisfies the conditions specified in section20.

(9) A bank or financial holding company shall immediatelynotify the Central Bank on becoming aware of circumstances thatindicate that a director or executive officer may not satisfy therequirements of subsections (1) to (7).

21. (1) A person shall on appointment as chief executive,deputy chief executive, executive director, Board member or keymanagement personnel, agent or other officer declare to the Board ofDirectors-

(a) any professional interests or the offices heholds as manager, director, trustee or by anyother designation; and

(b) his investment or business interests or thatof his spouse or any close relative, in firms,companies and institutions as a significantshareholder, director, partner, proprietor orguarantor.

(2) A chief executive, deputy chief executive, executivedirector, Board member, agent or officer shall declare to the bank orfinancial holding company any changes in his business interests orholding of offices as and when they occur.

(3) The bank or financial holding company shallimmediately place before its Board of directors all declarations madepursuant to subsection (2).

(4) A chief executive, deputy chief executive, executivedirector, Board member, agent or key management personnel whohas any direct or indirect interest in a proposed credit or other facilityto be given to any person by that bank or financial holding companyor in a transaction that is proposed to be entered into with any otherperson, shall as soon as practicable declare the nature and extent ofhis interest in the proposal to the bank's or financial holdingcompany's Board of directors.

(5) In deciding whether to grant a proposed credit facilityreferred to in subsection (4) the bank or financial holding companyshall take into consideration a declaration made under subsection(4).

34 35

Disclosure ofinterest.


(6) A chief executive, deputy chief executive, executivedirector, Board member, agent or key management personnel shallnot attend or participate in a board meeting where a proposal for acredit or other facility in which he has direct or indirect interests isbeing determined.

(7) A proposal in which a chief executive, deputy chiefexecutive, executive director, Board member, agent or key managementpersonnel has interests, directly or indirectly, shall be consideredand decided upon by the bank's or financial holding company's Boardof directors and not by any delegated authority.

(8) A chief executive, deputy chief executive, executivedirector, Board member or key management personnel whocontravenes this section shall be declared by the Central Bank not tobe a fit and proper person as defined by this Act.

PART III - CORPORATE GOVERNANCE

22. (1) The Central Bank may by statutory instrument makerules regarding matters of corporate governance for banks andfinancial holding companies that the Central Bank considers necessaryor appropriate to ensure sound operation including -

(a) the scope and nature of the duties ofdirectors;

(b) the requirements for audit committees andother specific committees of a Board ofDirectors;

(c) the responsibilities of key managementpersonnel;

(d) risk management;

(e) internal audit; and

(f) internal controls and compliance.

(2) The Central Bank shall review the corporategovernance structure and regulations of banks and financialholding companies including issues relating to -

(a) alteration of constitution;

(b) composition of the Board of directors;

(c) duties of the Board of directors;

(d) duties of the directors to report;

(e) appointment of internal auditor; and

(f) corporate secretary.

(3) A bank or financial holding company shall, within 28days of the date of approval by its shareholders or board of directorsof any alteration to its memorandum of association or of any otherdocument representing its constitution, submit the particulars of thealteration to the Central Bank for approval.

(4) Approval for the alteration shall not be granted bythe Central Bank unless it is satisfied that the proposed alteration isnot detrimental to the interests of the bank or financial holdingcompany's depositors.

(5) Notwithstanding anything contained in any legislationrelating to companies or in any other enactment, no application forregistration or confirmation of an alteration in the memorandum ofassociation or any other document representing the constitution of abank or financial holding company shall become effective withoutthe written approval of the Central Bank.

36 37

Corporategovernancerules.


(6) A bank or financial holding company which fails tocomply with the requirements of this Section shall be liable to anAdministrative Penalty.

(7) A bank or financial holding company shall begoverned by a board of directors that meets the following requirements-

(a) not less than five and not more than 9members, majority of whom shall be residentin Sierra Leone;

(b) not less than 50% excluding the Chairmanshould comprise non-executive directors;

(c) not more than 40% excluding the Chairmanshould comprise executive directors;

(d) not less than 10% should be independentnon-executive directors; and

(8) The board shall be chaired by a resident non-executive director.

(9) Directors shall be fit and proper persons as defined inthis Act.

(10) The board of directors of a bank or financial holdingcompany shall be responsible for providing strategic direction.

(11) The board of directors of a bank or financial holdingcompany shall be responsible for ensuring that -

(a) a sound r isk management culture isestablished throughout the bank or financialholding company and its subsidiaries;

(b) policies and processes are developed for risk-taking that are consistent with the riskmanagement strategy and the established riskappetite;

(c) uncertainties attached to risk measurementare recognised;

(d) appropriate limits are established that areconsistent with the bank or financial holdingcompany's risk appetite, risk profile andcapital strength and that are understood byand regularly communicated to relevant staff;and

(e) key management personnel take stepsnecessary to monitor and control all materialrisks consistent with approved strategies andrisk appetite.

(12) The board of directors of a bank or financial holdingcompany shall set suitable risk appetite levels to define the level ofrisk the bank or financial holding company is willing to assume.

(13) The board of directors of a bank or financialholding company shall be responsible for ensuring that the businessof the bank or financial holding company is carried on in compliancewith all applicable laws and safe and sound practices.

(14) The board of directors of a bank or financial holdingcompany may establish such committees necessary to implement itsduties.

(15) The board of directors of a bank or financial holdingcompany shall not delegate its responsibility for the safe and soundoperation of the bank or financial holding company.

38 39


(16) The board of directors of a bank or financialholding company as a group or each director individually shallimmediately report in writing to the Central Bank if they have reasonto believe that the bank or financial holding company -

(a) may not be able to properly conduct itsbusiness as a going concern;

(b) appears to be or is likely in the near future tobe unable to meet all, or any of its obliga-tions;

(c) has suspended or is about to suspend anypayment of any kind;

(d) does not, or may not be able to meet itscapital requirements as prescribed under this Act;

(e) is engaged, exposed or involved in an eventwhich is likely to have a material adverseimpact on the bank or financial holdingcompany; or

(f) violates or is about to violate a law orregulation.

(17) Any individual director who acts in accordance withthis Section shall make his or her intention known to the board ofdirectors in writing prior to reporting to the Central Bank.

(18) Where the board of directors or a director fails, omitsor neglects to report to the Central Bank any matter required to bereported under this Section, the Central Bank may remove any or allsuch directors.

(19) Notwithstanding sub section (18) the board ofdirectors or each director who violates the provisions of paragraph(a) of subsection (16) shall be liable to an administrative penalty.

(20) A bank or financial holding company shall have aninternal auditor, appointed by its board of directors who shall operateindependently of the board of directors and report to an auditcommittee.

(21) The internal auditor shall be a certified charteredaccountant or certified internal auditor.

(22) The internal auditor shall be given access tomanagement to discuss matters relevant to its functions and shallhave the right, upon request, to obtain from the bank or financialholding company any information or documentation which he shallrequire.

(23) The internal auditor shall be responsible for -

(a) monitoring the bank or financial holdingcompany's systems for internal controls,applicable policies and procedures;

(b) reporting non-compliance with policies,procedures or applicable laws or otherirregularities to an audit committee at leastquarterly, and more frequently whennecessary;

(c) assisting and cooperating with the externalauditor, referred to in subsection (1) ofsection 111, in the performance of its duties;and

(d) performing such other duties as may beassigned to the internal auditor by the boardof directors or an audit committee.

40 41


(24) A bank or financial holding company shall have acorporate secretary, appointed by its board of directors, who shall beaccountable to the board of directors.

(25) The corporate secretary shall be an executive officersuitably qualified.

(26) The corporate secretary shall be responsible foradvising and guiding the board of directors on matters of ethics andgood corporate governance.

PART IV -REGISTRATION OF A FINANCIAL HOLDING COMPANY

23. (1) A person shall not function as a financial holdingcompany except granted a licence under section 8 and registered asa Financial Holding Company under section 25.to function

(2) Where the Central Bank does not grant an applicationfor mlicence to a financial holding company under section 8 or registera financial holding company under section 25, it shall be unlawful for

(a) a person to operate as a financial holdingcompany;

(b) a bank to become a subsidiary of a financialholding company;

(c) a company to acquire direct or indirectownership or control of any voting shares ofany bank where, after such acquisition, suchcompany will directly or indirectly own orcontrol more than 5% of the voting shares ofsuch bank;

(d) a company, including a financial holdingcompany, to acquire all or substantially all ofthe assets of a bank; or

(e) a financial holding company to merge orconsolidate with any other financial holdingcompany.

(3) Notwithstanding subsection (2) the Central Bank mayexempt a bank or financial holding company from the application ofsubsection (2) where such bank or financial holding company issubject to supervision and regulation that is satisfactory to theCentral Bank, including supervision on a consolidated basis, in itshome jurisdiction or another jurisdiction in which it has substantialoperations.

(4) An exemption under subsection (3) may be madesubject to such terms and conditions as the Central Bank considersappropriate.

(5) The Central Bank may by statutory instrument makeregulations, rules and issue guidelines for the regulation andsupervision of financial holding companies.

24. (1) A financial holding company shall not -

(a) carry out any business other thanfinancial services;

(b) directly or indirectly control any memberof a financial group whether throughestablishment, acquisition or otherwise.

(2) A financial holding company may invest in banks andany other financial institutions as may be determined by the CentralBank.

(3) The Central Bank may by statutory instrumentprescribe rules relating to the maximum -

42 43

Financialholdingcompaniesnot tofunctionwithoutlicence orregistration.

Restrictionson activitiesof financialholdingcompanies.


(a) percentage of shares of a class or themaximum value of ownership interests that may be acquired or held;

(b) aggregate value of the shares and ownershipinterest of the activities permissible forfinancial holding companies.

(4) The Central Bank may exempt a financial holdingcompany from the restrictions under subsection (1) if that financialholding company is

(a) a foreign bank;

(b) a foreign financial institution; or

(c) a foreign financial holding company, wherethe Central Bank is satisfied that thepermitted activities of the foreign bank,foreign financial institution or foreignfinancial holding company are adequatelyregulated and supervised and do not presentunacceptable risks to any bank in SierraLeone.

25. (1) An application for the registration of a financialholding company shall be made in writing in such form, accompaniedby such non-refundable fee as may be prescribed by the CentralBank and supported by the following -

(a) a certified true copy of the applicant'sCertificate of Incorporation, Memorandumand Articles of Association and boardresolution in respect of its application;

(b) the capital resources, including originalsources and capital structure of the proposedfinancial holding company;

(c) the names, address, occupation, businessand professional history, certified financialpositions, and corporate affiliations ofpersons who will hold or ultimately benefitfrom significant shares, directly or indirectlyin the proposed financial holding companyand the respective values of the shares;

(d) the organisational and managerial structures,including a complete diagram of the group ofcompanies controlled by the proposedfinancial holding company, identifying alldirect and indirect affiliates and associatesand the nature of their relationship to thefinancial holding company;

(e) the particulars of the significant or controllingshareholders, beneficial owners, directors andkey management personnel of the proposedfinancial holding company, including theirqualifications and experience, business andprofessional history, certified financialposition, business interests and performanceof the business under their control ormanagement;

(f) the feasibility reports, including a businessplan and financial projections for the first 5years and areas of intended activities;

(g) the audited financial statements for the past3 years or for such lesser period as the entityhas been in existence;

(h) the measures and structures that thecompany intends to adopt to ensure that itsbusiness is conducted in accordance withsound corporate governance principles;

44 45

Registrationof financialholdingcompany.


(i) for each Director, key management personnelor significant shareholder of the proposedfinancial holding company, an affidavitdisclosing convictions, if any, for offencesby a court of competent jurisdiction, personalbankruptcy filings, disqualifications frompracticing a profession, or past or presentinvolvement in a managerial function of abody corporate or other undertaking subjectto insolvency proceedings, if any;

(j) particulars of any change in the informationprovided to Central Bank under this Act assoon as the applicant becomes aware of suchchange;

(k) the sources and legitimacy of the applicant'sminimum capital; and

(l) any other information or documentation thatthe Central Bank may require.

(2) The Central Bank, in determining whether to registeran applicant as a financial holding company under subsection (1),shall -

(a) take into account the information referred toin subsection (1), and in particular whetherthe person or persons controlling theproposed financial holding company are suchas to prejudice the interests of depositorsand other customers of the bank; and

(b) determine whether the legal, operational andmanagerial structure of the applicant and theownership of shares by the person orpersons controlling the proposed financialholding company, will hinder effective

supervision under this Act or would be likelyto prejudicethe interests of depositors andother customers of the bank.

(3) An application for registration under subsection (1)shall not be approved by the Central Bank, unless it is satisfied thatthe -

(a) significant or controlling shareholders,beneficial owners, directors and keymanagement personnel are fit and properpersons;

(b) proposed significant shareholders aresuitable and the ownership and managerialstructure of the proposed financial holdingcompany will not hinder effective su-pervision, including supervision on aconsolidated basis;

(c) capital of the applicant is adequate and theoriginal sources of capital are acceptable anddo not include borrowed funds;

(d) applicant's arrangements for corporategovernance, including, but not limited to,accounting risk management, and internalcontrol systems and records, are adequate;

(e) feasibility report is based on sound analysisunder reasonable assumptions; and

(f) applicant is a body corporate that controls abank.

(4) The Central Bank may attach conditions to theregistration of a financial holding company and may at any time vary,remove or add further conditions to the registration as the CentralBank considers necessary for the purposes of this Act.

46 47


(5) Where the Central Bank proposes to vary or addfurther conditions under subsection (4), the Central Bank shall givenotice of its intention to the financial holding company and thefinancial holding company may within 30 days make representationto the Central Bank.

(6) The Central Bank shall decide on an application forregistration as a financial holding company within 6 months afterreceipt of the completed information and documents under subsection(2).

(7) Where the Central Bank rejects an application undersubsection (1) he may provide reasons in writing to the applicant.

(8) Where a person is dissatisfied or aggrieved with adecision of the Central Bank in respect of this Section the personmay petition the Central Bank in writing within 10 days of receipt ofthe decision for a review.

(9) The Central Bank shall publish a list of all registeredfinancial holding companies and their subsidiaries.

(10) Registration under this Act shall be subject to suchother terms and conditions as the Central Bank may by statutoryinstrument prescribe.

26. (1) The Central Bank may withdraw the registrationof a financial holding company where-

(a) the financial holding company has failed tocomply with any obligation imposed on it byor under this Act;

(b) the financial holding company fails to complywith the conditions of its registration;

(c) the financial holding company ceases to meetthe requirements for registration as afinancial holding company;

(d) the Central Bank determines that theregistration was granted based on false orinaccurate information;

(e) the Central Bank determines that the financialholding company is or is likely to be insolvent;or

(f) the parent company of the financial holdingcompany loses its authorisation to carry outbanking business in its home jurisdiction orproceedings for bankruptcy, insolvency oran arrangement with creditors is initiated.

(2) Where the Central Bank intends to withdraw theregistration of a financial holding company, the Central Bank shallgive notice of its intention to the financial holding company andthe financial holding company may within 30 days makerepresentation in its defence to the Central Bank.

(3) Where the registration of a financial holding companyis withdrawn it shall -

(a) require divestiture of any bank controlled bythat financial holding company in Sierra Leoneand restrict transactions between any bankin the country and the financial holdingcompany, its affiliates and associates;

(b) place the financial holding company in officialadministration or receivership;

(c) notify the Deposit Protection Fund of thewithdrawal of registration of a financialholding company; and

48 49

Withdrawalof registrat-ion by theCentralBank.


(d) publish details of such withdrawal on itswebsite or any other media as the CentralBank deems appropriate.

PART V - CAPITAL AND RESERVES27. (1) A bank or financial holding company shall maintain

capital adequacy ratio as prescribed by the Central Bank both on asolo basis and a consolidated basis.

(2) The Central Bank may prescribe a higher capitaladequacy ratio with respect to -

(a) a particular bank, if it is satisfied that the bankhas insufficient capital to shield itself againstrisks arising from the business activities ofthat bank; or

(b) all banks, for a period that the Central Bankmay determine, if it is satisfied that theconditions in the financial system so warrants.

(3) A financial holding company shall ensure that thereis adequate distribution of capital within different entities of its groupaccording to allocation of risks.

(4) The capital adequacy ratio shall be measured as aratio of the capital base of a bank or financial holding company to itsrisk-weighted asset exposure.

(5) The Central Bank may define the eligible capital,categories of risk assets, appropriate adjustments and additions torisk weights for the purpose of calculating the ratio.

(6) The Central Bank may also prescribe capital bufferswith respect to a particular bank or financial holding company.

(7) In determining the percentage for the minimum capitaladequacy ratio, the Central Bank shall in each case have regard to-

(a) the nature, scale and risk of the bank orfinancial holding company's operationsand other available financial resources;and

(b) the amount and nature of net-own funds ofa bank required to protect the interests ofdepositors and potential depositors.

(8) The Central Bank may by statutory instrumentprescribe other prudential measures that it considers necessary orappropriate.

(9) A bank who fails to observe the capital adequacyratio prescribed by the Central Bank may be prohibited from-

(a) advertising for or accepting new deposits;

(b) granting credit and making investment; or

(c) paying dividend to shareholders.

(10) A financial holding company who fails to observethe capital adequacy ratio prescribed by the Central Bank may beprohibited from paying dividend to shareholders.

(11) The Central Bank may require a bank or financialholding company to draw up, within a specified time, a capitalrestoration plan acceptable to the Central Bank.

(12) A bank or financial holding company whocontravenes this section is liable to an action under sections 66and 67.

50 51

Capitaladequacy.


28. (1) The Central Bank may require a bank to maintainadditional capital as it considers appropriate in respect of risks whichhave not been adequately transferred or mitigated throughtransactions entered into by a bank or financial holding company.

29. The Central Bank shall require a bank or financial holdingcompany to calculate and maintain the minimum capital adequacyratio on a consolidated basis.

30. (1) A bank or financial holding company shall maintain ina statutory reserve fund of such amount as may be prescribed by theCentral Bank.

(2) A statutory reserve fund to be maintained by a bankunder subsection (1) shall comprise the following amounts whichshall be transferred out of its net profits for each year before it declaresany interim or final dividend and after it has made provision for anytaxes -

(a) where the amount of the statutory reservefund of the bank is less than 50% of its paid-up capital, an amount which shall not be lessthan 50% of its net profit for the year;

(b) where the amount of the statutory reservefund of the bank is 50% or more, but lessthan 100% of its paid-up capital, an amountwhich shall not be less than 25% of its netprofit for the year; and

(c) where the amount of the statutory reservefund of the bank is equal to 100% or more ofits paid up capital, an amount equal to 12.5%of its net profit for the year.

(3) A bank or financial holding company shall notappropriate a sum from the balance in its statutory reserve fundexcept with prior approval of the Central Bank.

(4) A bank or financial holding company which fails tomaintain a statutory reserve fund is liable to an administrative penalty.

31. (1) Subject to subsection (2) of section 30, a bank shallnot declare or pay an interim or final dividend on its shares until ithas-

(a) completely written-off all its capitalisedexpenditure;

(b) made the required provisions for non-performing loans and other deterioration inasset value; and

(c) satisfied the minimum capital adequacy ratiorequirements and any other capital ratiosspecified by the Central Bank.

(2) Where the payment of any interim or final dividendwould result in withdrawal of any part of the general reserves due toinadequacy of the profit for the year or where the statutory report ofthe auditors on the annual accounts of the bank is not satisfactory,the bank shall obtain prior written approval of the Central Bank beforeit declares any dividend on its shares.

(3) A bank shall not pay a dividend and bonus on itsshares without the prior approval of the Central Bank.

(4) Where a bank declares or pays any interim or finaldividend in contravention of this section, every director of the Boardof the bank is liable to an administrative penalty.

(5) A director of the bank shall not be liable to pay thepenalty if he proves that the contravention was committed withouthis consent or connivance or that he exercised all due diligence toprevent the contravention having regard to all the circumstances.

52 53

Capitaladequacy onconsolidatedbasis.

Statutoryreservefund.

Restrictionson declarationand paymentof dividend.

Additionalcapital


PART VI - LIQUIDITY32. (1) A bank or financial holding company shall at any such

time and in respect of any such period as the Central Bank mayrequire to submit to the Central Bank a report on its liquid assets andthe Central Bank shall prescribe one or more liquidity requirementsfor banks and financial holding companies in the form of regulations,rules, directives or guidelines.

(2) A bank shall maintain at all times the amount of liquidassets that may be determined by the Central Bank.

(3) The minimum liquidity requirements shall beexpressed as a ratio of a bank's liquid assets to its deposit liabilities.

(4) The Central Bank may prescribe a higher liquidity ratiowith respect to a particular bank, if it is satisfied that the businessactivities of that bank, including the operation of subsidiaries, sorequire.

(5) A bank who fails to hold liquid assets in accordancewith directives or guidelines issued under this Act is liable to anadministrative penalty.

(6) The Central Bank may during a period of liquiditydeficiency direct that a bank or financial holding company shalldiscontinue or limit in a manner specified in the directive, the grantingof credit, making of investments or capital expenditure and not todistribute dividends to its shareholders.

(7) The Central Bank may require a bank or financialholding company to furnish within a specified date such informationand in such form as it may deem necessary to ensure compliance withthe requirements of this section.

(8) A bank or financial holding company who fails tofurnish the information required under this section is liable to anadministrative penalty for each day during which the defaultcontinues.

(9) The Central Bank may under subsection (8) levy onthe non-compliant bank or financial holding company or its directorsor chief executive, or all or any of them, an administrative penalty foreach day during which the deficiency continues.

(10) The Central Bank may prescribe provisions onmaintenance of liquid assets for financial holding companies

33. At the close of business on each day, the assets of everybank in Sierra Leone shall not be less in value than an amountrepresenting such percentage of its liabilities payable at or throughits branch or branches in Sierra Leone as may be determined by theCentral Bank from time to time.

PART VII - OWNERSHIP AND CONTROL

34. (1) A bank or financial holding company that is a memberof a financial group shall provide to the Central Bank, biannually or atsuch other times as the Central Bank may prescribe, a completedescription of its organisational structure including-

(a) direct and indirect affiliates;

(b) the nature of its relationship with the othermembers of the financial group; and

(c) any other information the Central Bank mayrequire.

(2) A bank or financial holding company shall report tothe Central Bank, any changes to the organisational structure ofthe financial group of which it is a member, within such time as maybe prescribed by the Central Bank.

35. (1) A person shall not directly or indirectly, alone or inconcert with one or more persons-

54 55

Maintenanceof liquidassets.

Localasset.

Reporting ofGroupstructures

Acquisition,sale, disposal,or merger.


(a) acquire significant shares in a bank orfinancial holding company;

(b) hold or increase ownership interest in a bankor financial holding company in excess of 5%or such amount as may be prescribed by theCentral Bank;

(c) sell or dispose of any shares in a bank orfinancial holding company to any otherperson; or

(d) enter into an agreement or arrangement whichwill result in a change in the control of a bankor financial holding company,

without the prior written approval of the Central Bank.(2) A bank or financial holding company shall not enter

into any arrangement or agreement that would result in -

(a) the merger or restructuring of the bank or financial holding company;

(b) a change in controlling interest of a bank orfinancial holding company;`

(c) the sale or disposal by merger of its businessof banking or any proposal for recon-struction;

(d) the establishment or acquisition of asubsidiary or of any other mode ofoperation in or outside Sierra Leone, withoutprior written approval from the Central Bank.

(3) A bank or financial holding company shall, for thepurposes of obtaining an approval under subsection (2), submit awritten application to the Central Bank.

(4) The Central Bank shall, in determining whether or notto grant an application for approval of a bank or financial holdingcompany to enter into an arrangement or agreement under subsection(2), consider -

(a) whether the transaction is in compliance withthis Act;

(b) whether the transaction is in the publicinterest;

(c) the impact of the transaction on financial andmanagerial resources and the future prospectof the bank or financial holding company;and

(d) the impact of the transaction on thefunctioning and stability of the overallfinancial system and the conduct of effectivesupervision.

(5) The Central Bank shall notify the applicant undersubsection (3) in writing of its decision to grant or refuse theapplication within 60 days after receipt of the application and whereadditional information is required by the Central Bank, the time fornotification of decision to the application may be extended by 21days..

(6) Where the Central Bank is satisfied that a person is incontravention of subsection (2), it may annul the transfer, sale, mergeror reconstruction of the bank or financial holding company.

(7) In addition to powers under subsection (5) the CentralBank may suspend voting rights, prevent the distribution ofdividends or terminate the exercise of pre-emptive rights.

36. (1) A bank or financial holding company shall not acquireor hold part of the share capital of any small or medium scale industryor agricultural enterprise without the prior written approval of theCentral Bank.

56 57

Acquisitionof shares insmall andmedium scaleindustries orotherbusiness.


(2) Without prejudice to subsection (1), a bank or financialholding company may hold or acquire share capital of any small ormedium scale industry or other business, subject to the approvalof the Central Bank and to the following conditions-

(a) the shareholding by the bank or financialholding company is in small or medium scaleindustry or agricultural enterprise;

(b) the shareholding by the bank or financialholding company in any small or mediumscale industry or agricultural enterprise shallnot be more than 10% of the bank's or fin-ancial holding company's net own funds andshall not exceed 40% of the paid-up sharecapital of the company, the shares of whichare acquired or held; or

(c) the aggregate value of the equityparticipation of the bank or financial holdingcompany in all non-financial institutionsdoes not, at any time exceed 20% of its netown funds provided that a bank may holdshares acquired in the course of thesatisfaction of any debt owed to it.

(3) A bank or financial holding company shall within 21days of the acquisition of any shareholding pursuant to this sectiongive full particulars thereof to the Central Bank.

(4) A bank or financial holding company who fails tocomply with the provisions of this section is liable to an administrativepenalty for each day during which the default continues.

PART VIII - RESTRICTIONS ON LENDING37. (1) A bank or financial holding company shall not -

(a) undertake one or more secured creditexposures to or in respect of a single personor group of connected persons; or

(b) carry out any other transaction in respect ofany one person or group of connectedpersons, or any one sector of the economy,

which constitutes in the aggregate a liability to the bank amountingto more than 25% of its net own funds or a lower percentage that thecentral Bank may prescribe.

(2) A bank or financial holding company shall notundertake an unsecured credit exposure which in the aggregateconstitutes more than 10% of its net own funds.

(3) For the purpose of this section, 2 or more personsconstitute a group of connected persons where -

(a) a direct or indirect control relationship existsamong them; and

(b) as a result of the structure of their relationshipthe other person is ultimately responsible foror benefits from the credit exposureoutstanding.

(4) The Central Bank-

(a) may provide guidance for banks indetermining whether a connection existsamong a group of persons; and

(b) shall, where it is uncertain that a connectionexists, determine if a connection exists on anindividual basis based on the facts andcircumstances of a group of persons.

58 59

Limits onexposure tosingle personor group.


(5) The total of a bank's or financial holding company'scredit exposures shall not exceed the percentage level of net ownfunds prescribed by the Central Bank having regard to the risk andvulnerability of the financial system.

(6) In the case of transactions between banks, theaggregate of credit exposures and other financial guarantees orindemnities to any single bank shall not, except with the writtenapproval of the Central Bank, exceed 30% of the net own funds of thebank undertaking such credit exposures or 30% of the net own fundsof the bank to or in respect of which such facilities are extended,whichever of the two amounts is lesser.

(7) A credit exposure under subsection (1) shall not beconsidered as secured unless it is adequately secured by collateralhaving a market value that exceeds the outstanding amount of thecredit exposure throughout its term.

(8) In computing credit exposure to a single borrower orgroup of connected persons, the following assets which may be heldas collateral shall be deducted-

(a) cash deposit;

(b) lien on term deposit with the bank or financialholding company;

(c) market value of treasury bills, governmentsecurities, bank securities; and

(d) any other security as approved by the CentralBank.

(9) Credits extended to the subsidiaries of the recipientbank shall be taken into account in the calculation of the exposurelimit.

(10) A bank or financial holding company whosecapital adequacy ratio is less than the ratio prescribed by the CentralBank shall not receive any loan from any bank or financial holdingcompany except with the approval of the Central Bank.

(11) A bank or financial holding company shall within5 working days-

(a) report to the Central Bank where -

(i) the grant of a credit exposure to a singleperson or group of connected personsin the aggregate exceeds 10% of thenet own funds of the bank or financialholding company; or

(ii) a credit exposure exceeds the limit setby this section; and

(b) provide a written plan for remedying theviolation within a timeframe prescribed by theCentral Bank.

(12) The aggregate borrowing of a bank or financialholding company, local and foreign shall not exceed the percentageof that bank's or financial holding company's net owned funds asmay be determined by the Central Bank from time to time.

(13) Where a bank contravenes any of the provisions ofthis section, the bank and every director of its board is liable to anadministrative penalty.

(14) A director or chief executive of a bank shall notbe liable to the penalty in subsection (13) if he proves that thecontravention was committed without his consent, connivance orthat he exercised all due diligence to prevent the commission of thecontravention having regard to all the circumstances.


38. The Central Bank shall apply the credit exposure limitsunder section 37 to a single person or group on a consolidated basisto a -

(a) bank and the subsidiaries of a bank; and

(b) financial holding company and thesubsidiariesof a financial holding company.

39. (1) A bank or financial holding company shall not grantor permit to be outstanding a credit exposure in respect of an affiliateof that bank or financial holding company except on terms which arenon-preferential in all respect including credit worthiness, term,interest rate and the value of the collateral.

(2) A bank or financial holding company shall not take acredit exposure in respect of an affiliate if the aggregate of the creditexposures to the affiliates of the bank or financial holding companyexceeds 25% of the net own funds.

(3) Without prejudice to subsections (1) and (2), theCentral Bank may by order set a specific limit on credit exposure to anaffiliate on an individual basis having regard to the circumstances ofthe bank or financial holding company.

(4) A bank or financial holding company whichcontravenes this section is liable to an administrative penalty.

(5) A director or key management personnel of the bankor financial holding company who contravenes this section ispersonally liable to an administrative penalty.

40. (1) A bank or financial holding company shall not purchaseor transfer a non-performing or low quality asset from any of itsaffiliates and associates director, key management personnel,shareholders or from any of their related persons or group of relatedpersons or their related interests without the written approval ofthe Central Bank.

(2) A transaction carried out in contravention of thissection is void and a director or key management personnel of thebank or financial holding company who contravenes this section ispersonally liable to an administrative penalty.

41. (1) A bank or financial holding company whose capitaladequacy ratio is less than that prescribed by the Central Bank shallnot take any placement or receive any deposit from any bank orfinancial holding company except with the express written approvalof the Central Bank.

(2) Placements between banks which are members of afinancial group shall be subject to restrictions on transactions withan affiliate under section 40.

(3) A bank or financial holding company whichcontravenes this section is liable to an administrative penalty.

42. (1) A bank or financial holding company shall not -

(a) grant or permit to be outstanding a creditexposure to insiders and their relatedinterests except on terms which are non-preferential in all respects including creditworthiness, interest rate and the value of thecollateral;

(b) take a credit exposure in respect of insiderand their related interests if the aggregate ofall credit exposures to the insider and itsrelated interests would exceed 10% of the netown funds of the bank or financial holdingcompany; and

(c) take credit exposures in respect of insidersand their related interests if the aggregate ofall such credit exposures would exceed 20%of the net own funds of the bank or financialholding company.

Exposurelimits on aconsolidatedbasis.

Restrictionson transact-ions with anaffiliate.

Restriction onpurchase ortransfer ofcertain assetsfrom affiliatesand insiders.

Restrictionson inter-institutionalplacements.

Restrictionson exposuresto insidersand theirrelatedinterests.


(2) An unsecured credit exposure to insiders and itsrelated interests shall not exceed 5% of the net own funds of the bankor financial holding company.

(3) Subject to subsection (7) of section 37 a creditexposure shall not be considered as secured unless it is adequatelysecured by collateral having a market value of at least 120% of theoutstanding amount of the credit exposure throughout its term.

(4) The Board of directors of the bank or financial holdingcompany shall be the only authority to approve or sanction anycredit exposures of the bank or financial holding company to anyinsider or their related interests.

(5) When calculating capital adequacy, credit exposuresthat are in excess of the limits of this section shall be deducted fromcapital.


43. The limits on credit exposures to insiders and their relatedinterest under section 42 shall be applied on a consolidated basis to-

(a) bank and its subsidiaries ; and

(b) financial holding company and itssubsidiaries.

44. (1) In considering an application for credit facility to aninsider under section 42 a bank or financial holding company shallsatisfy itself that-

(a) the person to whom the credit facility is givenhas credit worthiness which is not less thanthat normally required by the bank or financialholding company for other persons to whomcredit facilities are given and any collateralwhich is provided has been evaluated on the

Limits onexposures toinsiders on aconsolidatedbasis.

Requirementsfor lending toinsiders andtheir relatedinterests.

same terms and procedures normally requiredby the bank or financial holding company forother persons to whom credit facilities aregiven;

(b) the terms and conditions of the credit facilityare not less favourable to the bank orfinancial holding company than thosenormally offered to other persons not relatedto the bank or financial holding company;and

(c) the advance of the credit facility is in theinterest of the bank or financial holdingcompany.

(2) The credit facility shall be approved by all otherdirectors of the Board of the bank or financial holding company at aduly constituted meeting of the board where not less than threequarters of all the directors of the Board of the bank or financialholding company are present and the approval shall be recorded inthe minutes of that meeting.

(3) The management of a bank or financial holdingcompany shall report to the Board of directors and to the CentralBank each credit facility to an insider or their related interests andeach credit facility shall be classified according to the directive onasset classification.

(4) A bank or financial holding company whocontravenes this section is liable to an administrative penalty.

45. (1) A lending on preferential terms to employees of a bankor financial holding company shall be part of a formally approvedemployment package or employee benefits plan.

(2) A bank or financial holding company shall not grantto any of its employees any unsecured advances or credit facilities,the aggregate amount of which exceeds 2 years' total emoluments ofthe officer or employee.

Restrictionson lending toemployees.


(3) The aggregate amount of all loans on preferentialterms, both secured and unsecured, by a bank or financial holdingcompany to employees shall not exceed 20% of the bank or financialholding company's net own funds.

(4) A bank or financial holding company who grantsadvances or credit facilities in contravention of this section is liableto an administrative penalty.

(5) When calculating capital adequacy, any creditexposures that are in violation of this section shall be deducted fromcapital.

46. (1) A bank or financial holding company shall notestablish a subsidiary company without the prior written approval ofthe Central Bank.

(2) A bank or financial holding company who contravenessubsection (1) is liable to an administrative penalty shall divest thesubsidiary within such period as may be specified by the CentralBank, failure of which the licence of the bank may be revoked or theregistration of the financial holding company withdrawn.

47. (1) The equity capital invested by a bank or financialholding company in its subsidiary shall not exceed 15% of the netown funds of the bank or financial holding company.

(2) Where a bank or financial holding company has morethan one subsidiary company, the aggregate of equity capital investedin all the subsidiary companies by the bank or financial holdingcompany shall not exceed 25% of its net own funds.

(3) The aggregate amount of credit exposures includingthe credit facilities which a bank or financial holding company maytake in respect of its subsidiaries, shall not exceed-

(a) 25% of the bank or financial holdingcompany's net-own funds where the bank orfinancial holding company has only onesubsidiary company, or

Restriction onestablishmentof subsidiarycompany.

Limits oninvestmentin respectof subsidiarycompanies.

(b) 35% of the bank or financial holdingcompany's net-own funds where the bank orfinancial holding company has more than onesubsidiary company.

(4) In a determination on an application by a bank toinvest or increase its equity interests in a financial company, theCentral Bank shall consider whether -

(a) the investment would expose the bank or itsdepositors to undue risk;

(b) the investment would hinder effectivesupervision of the bank on a consolidatedbasis; and

(c) the bank has adequate financial andmanagerial resources and internal controlsto monitor and control any risk arisingfrom the investment.


48. (1) A bank or financial holding company shall not grantany advances, loans or credit facilities including guarantees against-

(a) the security of its own shares;

(b) the shares of its holding company;

(c) the shares of any of its subsidiaries or theshares of any of the subsidiaries or itsfinancial holding company; or

(d) the shares of the subsidiaries of its financialholding company.

Restrictionson exposureand invest-ment.


(2) A bank or financial holding company shall not issueshares that are paid for by funds borrowed from that bank.

(3) A transaction carried out in contravention ofsubsections (1) and (2) shall be void.

(4) A Director of a bank or financial holding companywho contravenes subsections (1) and (2) is liable to an administrativepenalty.

(5) Subject to subsection (7), a bank may acquire or holdpart of the share capital of any financial company, the aggregatevalue of which shall not exceed a percentage to be determined bythe Central Bank, of the net own funds of that bank or financialholding company.

(6) A bank or financial holding company shall onlypurchase, acquire or lease real estate for the purpose of furtheringits own business or providing amenities for staff the value of whichshall not at any time exceed twenty-five (25%) of the net own funds.

(7) Subsection (5) shall not apply in respect of a share-holding in any corporation set up for the purpose of insuring bankor financial holding company deposits or of promoting thedevelopment of a money market or securities market or ofdevelopment of financial companies.

(8) Notwithstanding subsection (5), a bank or financialholding company shall not be excluded from the purchase and saleof shares or stock upon the order and for the account of a customer.

(9) Notwithstanding subsection (6), a bank or financialholding company may secure a debt on any transferable real orother property and in default of repayment may acquire such propertyfor resale by the bank or financial holding company within a specifictimeline as prescribed by the Central Bank.

(10) In the application of the limitation of subsection (5), ifthe Central Bank determines that the interests of a group, constitutingmore than one individual, partnership, private company, or otherassociation of persons corporate or unincorporated, are so interrelatedthat they should be considered as a unit, the total indebtedness ofthat group shall be combined and deemed to be in respect of a singleperson.

(11) A bank or financial holding company shall not bedeemed to have contravened subsection (1) solely by reason of thefact that the combined indebtedness exceeds that limitation at thetime of the determination, but the bank or financial holding companyshall dispose of the indebtedness of the group in the amount in excessof the limitation within such a specific time as prescribed by the CentralBank.

(12) A bank or financial holding company which before thecommencement of this Act entered into any transactions incompatiblewith subsection (1) shall as soon as the commencement of this Act,submit a statement to the Central Bank and shall, within one year fromthat date, finally liquidate all such transactions.

49. The Central Bank may make regulations, rules and issuedirectives and guidelines for the regulation of credit exposures.

50. (1) The Central Bank shall make rules and issue guidelineson non-performing assets, provisioning and loan write-offs.

(2) A bank or financial holding company shall maintainand implement a proper policy of non-accrual of interest on non-performing loans and provisioning for bad debts and other exposures.

(3) An asset or financial exposure of a bank or financialholding company shall not be written off or waived fully or partially,without the authorisation of the board of directors and the prior writtenapproval of the Central Bank.

(4) A bank or financial holding company which fails tocomply with this section is liable to an administrative penalty.

Regulationof creditexposures.

Assetclassification,provisioningand write-offs.


51. (1) The Central Bank may require a bank or financialholding company to periodically report their open foreign exchangeposition on a currency by-currency basis or overall open position,in such form and supported by such documents as may be prescribedby the Central Bank.

(2) A bank or financial holding company shall maintainthe maximum limits on its open position in foreign currencies, preciousmetals and precious stones as may be prescribed by the Central Bank.

52. The Central Bank may impose or vary prudential limits ona bank or financial holding company as it may consider necessary.

PART IX - SUPERVISION AND CONTROL

53. (1) The Central Bank shall make regulations, rules andissue directives and guidelines applicable to banks and financialholding companies.

(2) Without prejudice to subsection (1), regulations, rulesdirectives and guidelines issued by the Central Bank shall includeregulations, rules directives and guidelines relating to prudentialregulations, accounting standards, corporate governance standards,licensing requirements and non-interest banking.

54. (1) For the purposes of regulating banks or financialholding companies under section 55, the Central Bank may require abank or financial holding company to submit, at such intervals andin such form as the Central Bank may specify, information and periodicreturns on one or more of the following -

(a) assets and liabilities and financial positionon an individual basis and where applicable,on a consolidated basis;

(b) information required for statistical purposes;

(c) a bank's or financial holding company'soffices and branches;

Open foreignexchangepositions.

Power toimposeprudentiallimits.

Regulations,directives,andguidelines.

(d) such information that a bank or financialholding company is complying with this Act;and

(e) any other information or returns as theCentral Bank may consider necessary.

(2) The Central Bank may enquire and request forclarification of any information submitted under subsection (1).

(3) The Central Bank may require persons andinstitutions including significant shareholders, service providers,customers and any other person to supply in such form as the CentralBank may from time to time direct, information relating to mattersaffecting a bank, financial holding company or the financial systemas a whole.

(4) A bank or financial holding company shall report tothe Central Bank, immediately it becomes aware, of any materialinformation or development concerning -

(a) changes in the activities, structure andoverall condition of the bank or financialholding company particularly where there isan existing or likely failure to meet itsresponsibilities under this Act;

(b) the suitability of a major shareholder or aparty that has a controlling interest or anydevelopment that may affect compliance ofdirectors and key management personnelwith this Act.

(5) The Central Bank may require a bank or financialholding company to take corrective measures within a specified timeto address any deficiency contained in the report submitted to it bya bank or financial holding company under this section.

Informationand periodicreturns


(6) A bank or financial holding company which fails tocomply with any of the requirements under this section including -

(a) non submission;

(b) incomplete submission;

(c) delayed submission;

(d) inaccurate submission; or

(e) submission of false information, data,statements or returns,

shall be liable to an administrative penalty, for each day during whichthe non-compliance continues.

(7) This Section shall also apply to all branches, agentsor offices of a bank or financial holding company.

55. (1) Notwithstanding the power to request a bank or financialholding company to submit information and periodic returns undersection 54, the Central Bank may carry out investigation andexamination or scrutiny into any specific matter relating to theoperations of a bank or financial holding company.

(2) The Central Bank may carry out an investigation andexamination under subsection (1), at such intervals as it considersappropriate taking into account its evaluation of the risks posed bythe institution.

(3) A person authorised by the Central Bank to carry outan investigation under subsection (1) shall -

(a) have right of access to a bank or financialholding company's books and recordsincluding documents, minutes books,customer files, personnel files, cash andsecurities records and electronic informationfiles and it shall be the duty of the bank orfinancial holding company to cooperate andassist the person authorised to carry out thisfunction;

(b) have a right to call upon any director, keymanagement personnel or any otheremployee of the bank or financial holdingcompany to provide him with suchinformation and explanation as he mayconsider necessary and it shall be the dutyof director, key management personnel orother employee to comply.

(4) A person who fails to comply with this section orobstructs an authorised official from performing his duty, commits anoffence and is liable upon conviction to a fine or to a term ofimprisonment of 2 years or both the fine and imprisonment.

56. (1) A person authorised by the Central Bank to carry outan investigation and examination under subsection (1) of section 55,may, request for copies of any record, file or document relevant to his investigation.

(2) A person who requests for copies of records, files or documents under subsection (1) shall take reasonable care to protectthe files, documents and records in his custody or possession.

57. (1) The Central Bank may authorise qualified auditors orother officials to verify the accuracy of any file, document or recordrequested from a bank or financial holding company under section55.

(2) A bank or financial holding company shall provideaccess and facilities to an auditor or other official authorised or tocarry out verification under subsection (1).

58. (1) Where an examination has been conducted by theCentral Bank under section 55, the Central Bank shall furnish a copyof its report to the bank or financial holding company and give thebank or financial holding company an opportunity to submit itscomments on the report and to take any remedial action as the CentralBank may specify.

(2) A bank or financial holding company shall notdisclose an investigation report under subsection (1) or any portionof it to an unauthorised person, including anyone not officiallyconnected with the bank as an officer, director, employee, attorney,auditor, independent auditor or parent holding company, without thewritten consent of the Central Bank.

72 73

Power ofInvestigationand examin-ation.

Access torecords.

Verificationof informa-tion

Examinationreport


59. (1) The Central Bank may after examining a bank orfinancial holding company's comments under section 58 undertakeresolvability assessments and draw up ex-ante resolution plans thatshould require the bank or financial holding company to take remedialaction as the Central Bank may specify, including submitting arecovery plan in line with the criteria set by prudential guidelinesissued by the Central Bank under this Act.

(2) Where a bank or financial holding company fails totake remedial action as specified by the Central Bank undersubsection (1), every Director of the Board of the bank or financialholding company is liable to an administrative penalty.

(3) A Director shall not be liable to an administrativepenalty under subsection (2) if he proves that the contravention wascommitted without his consent or connivance or that he exercised alldue diligence to prevent the contravention having regard to all thecircumstances.

60. (1) All statements and other information furnished by abank or financial holding company including its officers and agentspast and present, to the Central Bank under this Act shall be deemedsecret and confidential.

(2) All statements and other information furnished byother supervisory authorities or institutions, its officers and agentspast and present, to the Central Bank, under this Act shall be deemedsecret and confidential.

(3) All statements and other information furnished bykey management personnel and employees of a bank or financialholding company's parent company, subsidiaries, affiliates andassociates past and present to the Central Bank, under this Act shallbe deemed secret and confidential.

(4) The confidentiality requirement under this sectionshall not apply where the Central Bank is -

(a) satisfied that it is in the national interest, forthe Central Bank to use any information in itspossession to compile and publish statisticaldata, and anything relevant thereto; or

(b) required by statutory duty or a court order tofurnish any such statement or information.

74 75

(5) A statement and other information furnished by a bankor financial holding company under this section may be used by theCentral Bank for the purposes of-

(a) issuing establishment and operatingpermissions;

(b) supervision of activities of a bank or financialholding company;

(c) monitoring compliance of this Act; or

(d) reviewing administrative decisions of theboard of directors of a bank or financialholding company.

61 (1) Notwithstanding section 60 the Central Bank may, onobtaining assurances of confidentiality -

(a) give to or receive from another Central Bank,financial regulator, supervisor, resolutionauthority, deposit insurance scheme or otherauthority in Sierra Leone or of a foreigncountry with functions corresponding to itsfunctions under this Act, information deemedsecret and confidential under section 60.

(b) enter into cooperative arrangement ormemorandum of understanding with othersupervisory and resolution authorities, otherfinancial sector regulators and stakeholdersin Sierra Leone or of a foreign country for theexchange of information deemed secret andconfidential under section 60.

62. (1) The Central Bank may, based on its findings of aninvestigation and examination conducted under section 55 orinformation otherwise at its disposal, take action where it determinesthat a bank or financial holding company, a director, executive officeror significant shareholder of a bank or financial holding company -

(a) has failed to adhere to any prudentialrequirements prescribed under this Act;

Resolvabilityassessments,ex-anteresolutionplans andfollow-upaction.

Confidentiality.

Power totake action.

Mutual Coop-eration inexchange ofconfidentialinformation.


(b) no longer possesses sufficient capital to meetits obligations towards its depositors andcreditors;

(c) has failed to maintain the prescribed minimumcapital adequacy ratio under section 27;

(d) has violated any condition or restrictionattached to a licence issued or registrationgranted under this Act;

(e) has been conducting its business in a mannerconsidered by the Central Bank to be unsafe,unsound or detrimental to the interest of itsdepositors and creditors;

(f) has compromised the interest of itsdepositors and creditors due to excessiverisk-taking or poor risk management;

(g) has failed to comply with the provisionspertaining to liquidity under section 32;

(h) has assets that are not likely to meet itsobligations in terms of maturity;

(i) is unable to reliably perform its activities, dueto impaired balance between revenues andexpenses;

(j) has assets that have deteriorated in such anextent as to weaken its financial structure;

(k) has not established its internal audit, internalcontrol and risk management systems orcannot operate these systems efficiently;

(l) is not being adequately supervised by othersupervisors relative to the risks attached toits activities;

(m) has hindered effective supervision on aconsolidated basis; or

(n) has failed to comply with any provision ofthis Act or of regulations, directives or rulesissued under this Act;

(2) The Central Bank may, where it determines that anyone or more of the situations in section (1) exist -

(a) issue a written warning to a bank or financialholding company, its chief executive,directors or key management personnel;

(b) require a bank or financial holding companyto cease an unsafe or unsound practise;

(c) conclude a written agreement with a bank orfinancial holding company providing for aprogram of remedial action;

(d) impose administrative penalties on a bank orfinancial holding company, its directors, keymanagement personnel and employees foreach day that an unsafe or unsoundcondition continues;

(e) require the restructuring of the ownership ofthe bank or financial holding company;

(f) require the restructuring of the range ofactivities that a consolidated group may beengage in;

(g) prohibit a bank or financial holding companyfrom further lending or taking further creditexposures, including investments, or capitalexpenditure;

(h) require the bank or financial holdingcompany, or any of its subsidiaries, tosuspend for a specified period of time, alter,reduce, or terminate any activity that hascaused material losses to the bank or financialholding company;

(i) restrict or prohibit transactions with affiliates;

76 77


(j) require a bank or financial holding companyto divest itself of or liquidate any subsidiary;

(k) restrict payment of bonuses or compensationto any director or key management personnel;

(l) prohibit a bank or financial holding companyfrom paying dividend on its equity capital orrights, issue or bonus shares to shareholdersor to any person claiming under theirauthority;

(m) suspend or remove from office the chiefexecutive of a bank or financial holdingcompany or restrict the chief executive'spowers;

(n) suspend or remove any or all of the directors,key management personnel of bank orfinancial holding company or restrict theirpowers;

(o) appoint an advisor;

(p) prohibit a bank or financial holding companyfrom receiving fresh deposits or renewingthe existing deposits;

(q) revoke the licence of a bank and appoint areceiver;

(r) withdraw the registration of a financialholding company;

(s) require a bank or financial holding companyto take such remedial action as the CentralBank may specify; or

(t) require a bank or financial holding companyto take such further action as the Central Bankconsiders necessary.

(3) The powers of the Central Bank to take action underthis section shall be in addition to any other specific actions oradministrative penalties that may be imposed by the Central Bankunder this Act.

(4) The Central Bank shall notify a bank or financialholding company immediately it initiates measures under this sectionagainst that bank or financial holding company.

(5) The Central Bank shall notify the Deposit ProtectionFund immediately it initiates measures under this section against abank.

63. (1) The Central Bank may where it considers it necessary,appoint by written order issued to a bank or financial holding companya competent person as advisor to the Chief Executive at the expenseof the bank or financial holding company, to improve its affairs.

(2) A written order appointing the advisor undersubsection (1) shall set out detailed terms of reference and timelinesfor the discharge of the advisor’s duties.

(3) The Central Bank may, before issuing an order undersubsection (1) give a hearing to the bank or financial holding companyunless it considers that the consequent delay in action would not bein the interest of the bank or financial holding company.

(4) A bank or financial holding company which has beenissued an order under subsection (1) shall comply with the order andextend full cooperation to the appointed advisor in discharging hisresponsibilities.

(5) An advisor appointed under subsection (1) shall beentitled to attend the meetings of the board of directors of a bank orfinancial holding company, its committees, participate in theirdeliberations and get his views recorded in the minutes of themeetings, but he shall not have any right to vote on any resolution.

(6) An advisor appointed under subsection (1), shall holdoffice for such period as may be specified by the Central Bank andhis tenure may be extended or curtailed at the discretion of the CentralBank.

(7) An advisor appointed under subsection (1) shallfurnish the Central Bank with a status report on the concerned bankor financial holding company as frequently as may be determined bythe Central Bank.

64. (1) Where the Central Bank has determined that a ChiefExecutive Director, key management personnel, other employee orshareholder of a bank or financial holding company has -

78 79

Appointmentof advisor.

Sanctionsagainst errantchief execu-tives, etc.


(a) violated this Act, regulations, rules ordirectives made under the Act;

(b) violated any condition or restriction attachedto a licence issued or registration granted bythe Central Bank;

(c) engaged in an unsafe or unsound bankingpractice.

the Central Bank may take one or more of the following actions -

(i) issue an order to that person to takesuch remedial action as the Central Bankmay specify within a stated period oftime;

(ii) impose an administrative penalty onthat person for each day that theviolation continues provided that anyfines shall be of similar amount forentities with comparable total assets forthe same type of violation;

(iii) require that person to reimburse thebank or financial holding company forlosses caused by such violations;

(iv) prohibit that person from direct orindirect exercise of voting rightsattached to shares of the bank orfinancial holding company;

(v) suspend or remove that person fromoffice or restrict the powers of thatperson;

(vi) prohibit the payment of dividends tothat person; or

(vii) suspend or remove any or all of thedirectors on the board of the bank orfinancial holding company.

(2) Where the Central Bank determines that a ChiefExecutive, Director, key management personnel or employee of a bankor financial holding company-

(a) has wilfully or repeatedly violated an ordermade by the Central Bank under section 62;

(b) has engaged in an unsafe or unsound practicethat has resulted in material loss to the bankor financial holding company or financial gainto that person; or

(c) has conducted its affairs in a mannerdetrimental to the interest of its depositorsand creditors, the Central Bank may, inaddition to its power to take action undersection 62, take any one or more of thefollowing actions-

(i) direct the dismissal of that person fromthe bank or financial holding company;

(ii) prohibit that person from serving in orengaging in the banking business for astated period;

(iii) impose administrative penalties on thatperson for each day that the violationcontinues; and

(iv) require that person to dispose of all orany part of his direct or indirect interestin the bank or financial holding companyor cease to hold a significant interest inthe bank or financial holding company.

65. (1) Where a bank or financial holding company whichmaintains a capital adequacy ratio in compliance with the capitalrequirements under Part V has incurred or is likely to incur materiallosses within any financial year, the Central Bank may take thefollowing actions-

80 81

Prompt corr-ective actionfor adequat-ely capitali-sed banks andfinancialholding com-panies.


(a) prohibit the bank or financial holdingcompany from declaring and distributing anydividends which are, in the opinion of theCentral Bank, likely to cause it not to complywith the capital requirements prescribed inPart V; and

(b) undertake more frequent inspection of thatbank or financial holding company.

(2) In addition to the action that may be taken undersubsection (1), the Central Bank may require the directors or keymanagement personnel of a bank or financial holding company toprovide written explanation detailing the cause of losses incurred oris likely to be incurred by the bank or financial holding company andthe measures to be taken to rectify the problem and avert futurelosses.

(3) The Deposit Protection Fund shall be notifiedimmediately the Central Bank initiates action under this section.

66. (1) Where a bank or financial holding company isundercapitalized, the Central Bank shall take the following actions -

(a) order the bank or financial holding companyto submit to the Central Bank within 45 daysan acceptable capital restoration plan and torestore the bank or financial holding companyto capital adequacy within 180 days of makingthe order;

(b) prohibit the bank or financial holdingcompany from declaring and distributing anydividends which are, in the opinion of theCentral Bank, likely to cause it not to complywith the capital requirements in Part V;

(c) undertake more frequent inspection of thatbank or financial holding company; and

(d) prohibit the bank or financial holdingcompany from awarding any bonuses orincrements in the salary, emoluments andother benefits to any director or keymanagement personnel.

(2) In addition to the action that may be taken undersubsection (1), the Central Bank may require the Directors or keymanagement personnel of the bank or financial holding company toprovide written explanation detailing the cause of the losses and themeasures to be taken by the bank or financial holding company torectify the problem and avert future losses.

(3) Where a bank or financial holding company has beenordered by the Central Bank to submit a capital restoration plan andto inject more capital and it fails to comply and implement this orderthe Central Bank shall do one or more of the following -

(a) prohibit the bank or financial holdingcompany from opening new branches;

(b) restrict the bank or financial holding companyfrom engaging in new business;

(c) impose restrictions on growth of assets orliabiities of the bank or financial holdingcompany; or

(d) restrict the rate of interest on all interestearning deposits payable by the bank orfinancial holding company to the rates thatthe Central Bank shall determine.

(4) In addition to the action that may be taken undersubsection (3) the Central Bank may-

(a) direct the removal of officers of the bank orfinancial holding company responsible fornoncompliance; and

(b) require the bank or financial holdingcompany to take any other action that theCentral Bank may deem necessary to rectifythe capital inadequacy.

82 83

Prompt corr-ective actionfor underca-pitalisedbanks andfinancialholding com-panies.


(5) The Deposit Protection Fund shall be notifiedimmediately the Central Bank initiates action under this section.

67. (1) Where a bank or financial holding company issignificantly undercapitalised, the Central Bank shall take thefollowing actions-

(a) enter into an agreement with the Board ofdirectors of the bank or financial holdingcompany to rectify the significant under-capitalisation within 90 days and to restorecapital adequacy within 180 days or within ashorter period that the Central Bank shallrequire;

(b) prohibit the bank or financial holdingcompany from declaring and distributing anydividends which are, in the opinion of theCentral Bank, likely to cause it not to complywith the capital requirements in Part V;

(c) undertake more frequent inspection of thatbank or financial holding company;

(d) prohibit the bank or financial holdingcompany from awarding any bonuses orincrements in the salary, emoluments andother benefits to all directors and keymanagement personnel; and

(e) prohibit the bank, or financial holdingcompany from engaging in new off balancesheet transactions.

(2) In addition to the actions that may be taken insubsection (1), the Central Bank may require the directors or keymanagement personnel of the bank or financial holding company toprovide a written explanation detailing the causes of those lossesand the measures to be taken by the bank or financial holdingcompany to rectify the problem and avert future losses.

(3) The Central Bank may take such action that may havea positive impact on -

(a) governance;

(b) cash availability;

(c) bank operations and expansion.

(4) Where at any time-

(a) before the end of the period specified inparagraph (a) of subsection (1), the financialposition of a bank or financial holdingcompany continues to deteriorate; or

(b) after the period specified in paragraph (a) ofsubsection (1) a bank or financial holdingcompany has failed to raise its capital to thelevels necessary to rectify its significantundercapitalisation, the Central Bank mayappoint an Official Administrator or revokethe licence of the bank or withdraw theregistration of the financial holding company.

(5) This section shall not preclude the Central Bank fromtaking action under any other provision of this Act prior to theexpiration of the respective time period under paragraph (a) ofsubsection (1).

(6) The Deposit Protection Fund shall be notifiedimmediately the Central Bank initiates action under this Section.

PART X - RESOLUTION OF BANKS AND FINANCIALHOLDING COMPANIES

68. (1) The Central Bank shall be the resolution authority forbanks licensed or registered under this Act.

(2) The Central Bank shall, exercise its powers andperform its functions in relation to a bank in resolution, have regardto and seek to promote the stability of the financial system, protectdepositors, maintain the continuity of systemically important financialservices, while minimising or avoiding reliance on public funds forany losses.

84 85

Resolutionauthority.

Prompt corr-ective actionfor signific-antaly under-capitalisedbanks andfinancialholding com-panies.


(3) The Central Bank shall, in exercising its powers andperforming its functions in relation to a financial holding company inresolution, have regard to and seek to minimise any adverse impacton the interests of shareholders and creditors of other members inthe group of companies of which the financial holding company inresolution forms part.

69. (1) Where in the opinion of the Central Bank, a bank orfinancial holding company is failing or likely to fail, the Central Bankmay make an order in writing placing a bank or financial holdingcompany in resolution and notify the bank or financial holdingcompany accordingly.

(2) An order made by the Central Bank under subsection(1) shall be published in the Gazette.

(3) In making a decision to place a bank or financialholding company in resolution under subsection (1) the Central Bankshall consider whether -

(a) the bank or financial holding company hasviolated this Act or any regulation, rule,directive or guideline issued under this Act,or has engaged in any unsafe and unsoundpractices, in such a manner as to weaken thecondition of the bank or financial holdingcompany and seriously jeopardisedepositors'interests or dissipate the bank'sor financial holding company's assets;

(b) prompt corrective action for anundercapitalised bank or financial holdingcompany under sections 66 and 67 has failed;

(c) a bank or financial holding company hasbecome insolvent or that it may reasonablybe expected to become insolvent within thenext 60 days;

(d) there is reasonable cause to believe that thedirectors, key management personnel, orsignificant shareholders of a bank or financialholding company has engaged or is engagingin illegal activities in such a manner as tojeopardise depositors' interests;

(e) a bank or financial holding company is in anunsafe or unsound condition to transactbusiness and the directors or keymanagement personnel of a bank or financialholding company are unable to promptlyimprove its condition;

(f) a bank or financial holding company hasfailed, in any manner, to cooperate with theCentral Bank or its examiners to perform itssupervisory responsibilities, includingconcealment or failure to submit forinspection any of the bank's or financialholding company's books, papers or records;

(g) the directors, key management personnel,employees, or significant shareholders of abank or financial holding company has failedto comply with an order of the Central Bankunder sections 62, 64 or 65.

70. (1) The Central Bank shall have the power and authorityto manage and control the affairs of a bank or financial holdingcompany and to exercise any of the powers of the governing bodyand the shareholders of the bank or financial holding company orany of the powers and functions set out in sections 74 and 75 for anofficial administrator appointed by the Central Bank

(2) Notwithstanding the generality of subsection (1) theCentral Bank shall -

(a) facilitate a bail-in as a means to achievecontinuity of essential functions within theterms and conditions as prescribed in theprudential guidelines issued by the CentralBank.

(b) appoint an official administrator under section74;

(c) establish a separate asset managementvehicle for a bank or financial holdingcompany;

Decision byCentral Bankto place inresolution.

Central Bankto manageand controlaffairs ofbanks orfinancialholdingcompanies inresolution


(d) prohibit a bank or financial holding companyfrom offering shares to existing shareholders,where the Central Bank is of the opinion that-

(i) it is necessary to maintain the financialstability of a bank or financial holdingcompany, or

(ii) the existing shareholders are no longersuitable to maintain a significant capitalposition in a bank or financial holdingcompany; or

(iii) there has been a failure to comply timelywith a remedial measure under this Actrequiring an increase in the bank's orfinancial holding company's capital.

(e) carry out recapitalisation by newshareholders and the official administratorshall -

(i) if not already carried out in accordancewith Section 69, determine the extent oflosses and prepare the bank's orfinancial holding company's financialstatements covering the amount of suchlosses through the bank's or financialholding company's profits, reservesand, if necessary, capital;

(ii) if necessary to reflect losses, reduce thepar value of outstanding shares,notwithstanding any other law to thecontrary;

(iii) determine the amount and type offunding needed to bring the bank orfinancial holding company intocompliance with all capital requirements;

(iv) cause the bank or financial holdingcompany to issue additional shares in

the amount necessary and carry out thesale of shares by the bank or financialholding company and purchase of suchshares by new investors.

71. (1) The Central Bank may carry out the restructuring of abank, including the merger, transfer and sale of a bank's assets andliabilities, without the approval of its creditors or shareholders.

(2) The Central Bank shall transfer the assets andliabilities to a bridge institution, asset management vehicle or anyother institution appointed by the Central Bank for a temporary period,for the purpose of acquiring, managing or disposing of assets andliabilities of a bank undergoing restructuring under subsection (1) aspart of the resolution of that bank.

(3) The Central Bank may by statutory instrument, makeregulations setting out the requirements for licensing bridgeinstitutions, asset management vehicles or other institutions, theirgovernance structure, sale, disposal, dissolution or termination.

(4) A bridge institution, asset management vehicle orother institution appointed by the Central Bank under subsection (1)shall, subject to the direction of the Central Bank approve therestructuring of the assets and liabilities of a bank througharrangements with the creditors, including a reduction, modification,rescheduling and novation of their claims.

(5) The Central Bank may, subject to this section and tocredit exposure limits under section 35 approve or decline a merger ofa bank with another bank or the sale of a bank's assets to anotherbank.

(6) A bridge institution, asset management vehicle orother institution to which the assets and liabilities of a bankundergoing restructuring is transferred has the same rights and shallbe subject to the same obligations as those that the bank may havehad or to which it or by which it may have been bound immediatelybefore the transfer.

72. (1) An official administrator appointed under section 74may, in accordance with the inventory of the bank's assets andliabilities prepared and delivered to the Central Bank by the officialadministrator under subsection (2) of section 79 and with the approval

88 89

Restructuring,includingmerger,transfer andsale.

Mandatoryrestructuringof liabilitiesand shares.


of the Central Bank, restructure the liabilities and shares of a bank orfinancial holding company without the approval of creditors orshareholders.

(2) The Central Bank may approve mandatoryrestructuring under subsection (1), including a bail-in resolutionapproach, if the Central Bank is satisfied that the restructuring, eitheralone or combined with recapitalisation, will restore the bank toviability.

(3) In approving mandatory restructuring, the CentralBank shall also consider the extent to which the restructuring willmaximise the value of a bank, minimize losses to creditors and otherstakeholders, preserve its going-concern value for the benefit ofcreditors and other stakeholders and avoid or mitigate any severedisruption in the stability of the financial system.

(4) The restructuring of liabilities shall follow the orderof priorities that would be applicable in liquidation, except that theCentral Bank may exempt classes of senior unsecured debt if itdetermines them to be systemic or of strategic importance that wouldjustify differential treatment from other unsecured senior debt.

(5) Mandatory restructuring shall not apply to secureddebt.

(6) As part of the restructuring of liabilities, debt may berestructured directly or converted to equity.

(7) New shareholders by virtue of debt equity conversionshall be subject to fit and proper assessments as prescribed in thisAct.

(8) The securities and company law shall not apply intransactions relating to conversion of debt to equity.

(9) Where the Central Bank is of the opinion that it isnecessary to restructure a bank's or financial holding company'sliabilities and shares for the orderly resolution of the bank or financialholding company under this Act, the Central Bank may by writtenorder-

(a) cancel some or all of the shares of the bankor financial holding company;

(b) by notice to a party to an agreement underwhich an amount is or may become payableby a bank or financial holding company underan agreement, reduce, up to zero, the amountthat is or may become payable to such party;or

(c) convert any unsecured liabilities of a bank orfinancial holding company in a way thatresults in the liability being substituted witha shareholding in the bank or financialholding company or in a bridge institution.

73. (1) An action under this section shall not by itself giverise to any right by a party to, or a person who holds an interest inany agreement.

(2) In taking an action under this Part in relation to aninstitution in resolution, the Central Bank shall treat claims of creditorsor shareholders of the institution that would have the same rankingin liquidation under section 102, unless it determines that it isnecessary to treat them differently to effect the orderly resolution ofthe designated institution thereby containing the potential negativeimpact of such restructuring on financial stability or to maximize thevalue of claims for the benefit of all the institution's depositors andcreditors as a whole.

PART XI - OFFICIAL ADMINISTRATION

74. (1) The Central Bank may by notice in writing appoint aperson to be the official administrator of a bank in resolution withspecified powers and functions.

(2) A notice in writing appointing a person to be theofficial administrator under subsection (1) shall -

(a) specify the grounds upon which it is adoptedand such decision shall be promptly notifiedto the bank subject to official administration;

(b) be effective at the time specified in thedecision or, if no time is specified, at the timenotice is given under sub section (1);

90 91

Claims ofaffectedpersons.

Officialadministrator.


(c) have legal force and effect of an enforceablecourt order requiring law enforcementauthorities to provide assistance.

(3) A bank may remain in official administration for a periodnot exceeding 6 months and the period may be extended by theCentral Bank only once, for a period not exceeding 6 months.

(4) The Central Bank may remove the officialadministrator before the end of the period specified in paragraph (a)of subsection (2) and appoint a replacement.

(5) The Central Bank shall ensure that the bank remainsunder the control of an official administrator appointed undersubsection (1), during official administration,

(6) An official administrator appointed under subsection(1), shall have an obligation to report to the Central Bank and not tothe board of directors.

(7) The official administrator shall have no financialinterests or relationship nor engage in any transaction with the bankor specialised deposit-taking institution in official administration.

(8) Where an official administrator engages in anytransaction involving the bank or specialised deposit-takinginstitution in official administration contrary to subsection (7), theCentral Bank shall set aside the transaction, terminate the appointmentof the official administrator with immediate effect, and appoint a newofficial administrator.

(9) The Central Bank shall notify the Deposit ProtectionFund in advance of the commencement, suspension or cessation ofofficial administration of a bank.

(10) Where applicable the Central Bank shall immediatelynotify the supervisor of a financial holding company of thecommencement, suspension or cessation of official administration ofa bank.

75. (1) As of the effective time of the appointment all powers,functions and responsibilities of the bank's shareholders, directorsand key management personnel shall be vested in the officialadministrator unless the official administrator requests the

shareholders or directors or key management personnel to carry outany activity required under this Act.

(2) Any action or decision taken by or on behalf of abank under official administration shall be null and void, unless takenby or under the authority of the official administrator.

(3) An official administrator shall have full and exclusivepowers to manage and operate a bank under official administration inaccordance with regulations, directives and guidelines of the CentralBank.

(4) An official administrator may take any action asnecessary or appropriate to carry on the business of a bank underofficial administration, to preserve and safeguard its assets or toimplement a plan of action with respect to the bank that has beenapproved by the Central Bank.

(5) An official administrator shall have the power to setout principles for valuation of assets and liabilities in accordancewith guidelines of the Central Bank

(6) An official administrator may request any informationfrom the existing or previous directors, senior managers orshareholders of a bank in official administration, its subsidiaries,affiliates or any third parties who hold information that may benecessary to carry out his functions

(7) An official administrator may employ, at the expenseof a bank under official administration, independent attorneys,accountants and consultants to assist the official administrator, onsuch terms as the Central Bank shall approve.

(8) An official administrator shall, upon appointment,immediately suspend the payment of any dividends or other form ofcapital distribution to shareholders as well as any payment to directorsother than for salaries or services provided to the bank.

(9) An official administrator shall have unrestrictedaccess to, and control over, the properties, offices, assets and thebooks of account and other records of the bank subject to officialadministration.

92 93

Powers ofofficialadministrator.


(10) An official administrator may secure the properties,offices, assets, books and records of a bank and may take all necessaryor appropriate steps aimed at such purpose.

(11) An official administrator may, if necessary requestlaw enforcement officials to assist him, if necessary, use force, togain access to any premises of the bank and to gain control over andto secure properties, offices, assets, books and records.

(12) Directors, key management personnel and employeesof the bank shall cooperate fully with and assist the officialadministrator and shall make available to the official administrator allrecords and documentation pertaining to the bank in officialadministration and any additional information or report requested bythe official administrator.

(13) A person who fails to comply with subsection (12) orotherwise obstructs an official administrator in the performance ofhis functions under this Act shall be liable on summary conviction toa fine or to serve a term of imprisonment not exceeding 2 years orboth.

76. (1) The official administrator shall act in accordance withinstructions and guidance given by the Central Bank at any time inthe course of an official administration and shall be accountable onlyto the Central Bank for the performance of duties and the exercise ofpowers as official administrator.

(2) An official administrator may delegate any of hispowers or duties to other persons, in accordance with the instructionsissued by the Central Bank.

77. (1) The Central Bank may impose a moratoriumsuspending some or all payments by a bank in official administrationincluding restrictions on all forms of lending and capital expenditureexcept payments to central clearing counterparties and to paymentsettlement and clearing systems.

(2) No legal action may be commenced against the bankin official administration without prior written approval of the CentralBank.

(3) The Central Bank may impose a stay on all legalactions against a bank in official administration, including restrictions

on all forms of lending and capital expenditure, except payments tocentral clearing counterparties and to payment, settlement andclearing systems

(4) Where a person is dissatisfied or aggrieved with adecision of the Central Bank the person may petition the CentralBank in writing for a review within 10 days of the decision.

78. (1) No right or obligation of a third party under anycontract to which the bank in official administration is a party may beterminated, accelerated or modified solely because of the appointmentof the official administrator or any action taken by the officialadministrator.

(2) Notwithstanding subsection (1) no performance ofpayment and delivery obligations under a recognised clearing,settlement, or payment system right or obligation of a third partyunder any contract to which the bank in official administration is aparty may be terminated, accelerated, or modified solely because ofthe appointment of the official administrator or any action taken bythe official administrator.

79. (1) Not later than 30 days after his appointment the officialadministrator shall prepare and deliver to the Central Bank aninventory report of the assets and liabilities of a bank in officialadministration.

(2) An inventory report under subsection (1), shall -

(a) itemize the assets and liabilities of a bank inofficial administration according to their riskprofiles and classify the non-performingloans;

(b) propose a plan of corrective actions includingrecommendations for capital increase or anyother course of action designed to minimizedisruption to depositors and preserve thestability of the financial system.

(3) Not later than 90 days after his appointment, theofficial administrator shall prepare and deliver to the Central Bank areport on the financial condition and future prospects of a bank inofficial administration.

94 95

Central Bankoversight ofofficial admi-nistrator.

Moratoriumand effect ofofficial adm-inistration onproceedings.

Third partyrights orobligations.

Inventoryand plan ofaction toresolve bank.


(4) A report on the financial condition and futureprospects of a bank in official administration under subsection (3),shall include an assessment of the amount of assets likely to berealised in a liquidation of the bank.

(5) An official administrator shall promptly provide anyadditional report or information requested by the Central Bank.

80. (1) On the basis of the report under subsection (3) ofsection 79 the official administrator may -

(a) with the approval of the Central Bank, increasethe capital of a bank in official administration,through the issuance of new shares;

(b) determine the extent of losses of a bank inofficial administration and prepare thefinancial statements covering the amount ofsuch losses through the bank's profits,reserves and, if necessary, capital; and

(c) notify existing shareholders of the amountof additional capital needed to bring thebank's capital into compliance with all capitalrequirements and allow such shareholders tosubscribe and purchase additional shares bysubmitting bindingcommitments equal to thefull amount of additional capital needed within5 working days of such notification.

(2) Existing shareholders of a bank in officialadministration shall have no pre-emptive or other rights to purchaseadditional shares issued except as provided under paragraph (c) ofsubsection (1).

81. (1) An official administrator may, with the approval ofthe Central Bank, remove any or all directors and key managementpersonnel and appoint their replacement.

(2) Replacements under subsection (1) may only beapproved by the Central Bank if they are determined to be fit andproper persons as defined by this Act.

82. (1) Where an official administrator has reasonable causeto believe that significant shareholders, directors, key managementpersonal, attorneys, accountants or other professionals have engagedor are engaging in illegal or fraudulent activities punishable byimprisonment, it shall immediately recommend to the Central Bankthat civil action be instituted against such person seeking damagesand restitution.

(2) The Central Bank shall report any criminal findings tothe relevant authorities for criminal prosecution against such persons.

83. (1) The official administrator shall receive suchremuneration as shall be determined by the Central Bank.

(2) All costs and expenses incurred on account of theofficial administration shall be borne by and charged to the bank inofficial administration.

84. (1) An official administration shall terminate at the expiryof the terms specified in the notice appointing the official administratoror any extension of the term of such appointment.

(2) An official administration shall be terminated prior tothe expiration of the term in the notice of appointment of the officialadministrator if the Central Bank determines that-

(a) official administration is no longer necessarybecause grounds for appointment of theofficial administrator have been remedied; or

(b) the bank in official administration cannot berehabilitated.

(3) Where an Official Administration is terminated theCentral Bank shall appoint a receiver to liquidate the bank.

(4) Within 14 working days of the termination of theappointment of a receiver under subsection (3), the officialadministrator shall prepare and submit to the Central Bank a finalreport and accounting of the official administration.

(5) An official administrator shall not acquire significantshares or accept appointment as a director, key managementpersonnel or any other office or position in the bank in official

Capitalincrease byexistingshareholders.

Removal ofdirectors andkey mana-gement pers-onnel.

Misconductby Share-holders,directors, ect.

Expenses ofthe officialadministrator.

Terminationof officialadministration.

96 97


administration for a minimum period of 2 years after the end ofofficial administration.

85. (1) The Central Bank or its agents shall not take anyresolution action in relation to a bank or financial holding companythat would result in a creditor or shareholder of that bank or financialholding company receiving less than the creditor or shareholderwould have received if the bank or financial holding company hadbeen wound up.

(2) Failure to comply with subsection (1) shall notinvalidate the action taken, but shall entitle the affected creditor orshareholder to monetary compensation representing the differencebetween the value the affected creditor or shareholder actuallyreceived in resolution and what they would have received if theinstitution had been wound up.

(3) As soon as practicable after a bank or financial holdingcompany ceases to be in resolution, the Central Bank shall obtain avaluation of the assets and liabilities that were dealt with in resolutionaction, to determine whether a creditor or shareholder of the bank orfinancial holding company received in respect of resolution action,less than it would have received if the bank or financial holdingcompany had been wound up and if so, determine the amount of theshortfall.

(4) Any shortfall determined under subsection (3) shallbe paid to the affected creditor or shareholder from recoveries fromthe resolution action or from a resolution fund.

(5) A valuation under this section shall be carried out bya valuation expert that meets such requirements as the Central Bankmay by statutory instrument prescribe.

86. The Central Bank may recover from a bank or financialholding company in official resolution, including after the bank orfinancial holding company ceases to be in resolution, the amountsthat the Central Bank or its designated agent reasonably andproperly incurs in exercising its powers and performing its functionsin relation to the resolution of the bank or financial holding company.

87. (1) A person aggrieved with a decision of the CentralBank in respect of the revocation of a licence or any decision relatingto the appointment of an official administrator, receiver or other

resolution measure may file a claim in the High Court within 14 daysof the final decision of the Central Bank.

(2) In any proceedings under subsection (1), the HighCourt shall-

(a) take the public interest into considerationand shall have regard to the criticalimportance of-

(i) maintaining financial stability;

(ii) permitting the Central Bank to dischargeits functions in an expeditious andefficient manner.

(b) focus its enquiry as to whether the defendantacted in bad faith or in violation of any ofthis Act and the plaintiff in each case shallhave the burden of establishing thisstandard.

(3) Any action under this Act by the Central Bank or itsofficials, the official administrator or receiver that is the subject ofany court proceedings shall be allowed to continue unrestrictednotwithstanding the challenge or appeal before the court.

(4) Where the Court finds that the defendant has actedin bad faith or in violation of this Act, the court shall be restricted tomonetary compensation to the plaintiff and will be considered as fullredress for the plaintiff in respect of the actions complained of.

PART XII - RECEIVERSHIP AND LIQUIDATION

88. (1) Where the licence of a bank is revoked pursuant tosection 9 the Central Bank shall appoint a receiver who shall takepossession and control of the assets and liabilities of that bank.

(2) Where a receiver is to be appointed to takepossession and control of the assets and liabilities of a bank undersubsection (1), the Central Bank shall notify the Deposit ProtectionFund in advance of its decision.

“No creditorworse off”rule.

Costs ofresolution.

Review ofresolutiondecisions ofCentral Bank.

Appiontmentof receiver.

98 99


89. (1) A receiver may be a person or an official of the CentralBank who meets the qualifications prescribed by the Central Bank.

(2) The Central Bank may dismiss a receiver and appointa replacement.

(3) The receiver shall receive such remuneration as shallbe determined by the Central Bank.

(4) All costs and expenses incurred by the receiver andexperts engaged by him shall be paid from the assets of the bank inreceivership.

(5) Payments to the receiver may be made on a currentbasis if in the judgment of the receiver there are sufficient liquidassets.

(6) Any monies owing to the receiver at the end of theterm of receivership shall be paid from the proceeds from the sales ofthe bank's assets in accordance with the priority set out under section102.

90. (1) The appointment of a receiver by the Central Bankunder subsection (1) of section 88 shall be effective as of the date ofthe appointment unless otherwise expressed by the Central Bank.

(2) The receiver shall immediately post in each place ofbusiness of the bank in receivership, a notice specifying that -

(a) the effective date and time of possession ofthe bank in receivership by the receiver;

(b) authorisation of persons to engage infinancial transactions of the bank inreceivership have been withdrawn;

(c) persons who previously had authorisationto give instructions on behalf of the bankin receivership with respect to payment ortransfer of the bank's assets or assetsmanaged by the bank are no longer soauthorised; and

(d) the licence of the bank in receivership hasbeen revoked.

(3) The receiver shall publish the notice referred to insubsection (2) for 4 consecutive weeks in at least one daily newspaperof national circulation and submit copies of the publication to theCentral Bank within 2 days of such publication.

91. (1) The receiver shall act in accordance with regulations,instructions and guidelines issued by the Central Bank at any time inthe course of the liquidation and shall be accountable only to theCentral Bank for the performance of duties and the exercise of powersas receiver.

(2) The receiver shall report each month to the CentralBank on the progress of the receivership in such form as may beprescribed by the Central Bank and provide any other informationupon request of the Central Bank.

92. (1) Upon appointment the receiver shall become the solelegal representative of the bank and shall succeed all the rights andpowers of the shareholders, directors and key management personnelof the bank in receivership.

(2) Notwithstanding subsection (1) shareholders,directors and key management personnel may be instructed by thereceiver to exercise specified functions for the bank in receivership.

(3) The rights and powers of the receiver shall include-

(a) holding title to the books, records, and assetsof the bank in receivership;

(b) managing, operating and representing thebank in receivership;

(c) marshalling assets and claims of the bank inreceivership;

(d) transferring or disposing of assets of thebank in receivership;

(e) subject to the approval of the CentralBank, suspending or limiting the payment ofdebts of the bank in receivership;

(f) hiring specialists, experts or professionalconsultants;

Qualificationand compen-sation ofreceiver.

Notice andregistrationof receiver-ship.

Powers ofreceiver.

100 101

Central Bankoversight ofreceiver


(g) administering the accounts of the bank inreceivership;

(h) collecting the debts due to the bank inreceivership and recovering goods owed toit by third parties;

(i) taking action to collect from directors andofficers of the bank in receivership, lawyers,auditors and any other third parties includingholding companies who may havecontributed to the failure of the bank;

(j) initiating or defending legal proceeding andexecuting relevant instruments in the nameof the bank in receivership; and

(k) taking any other action necessary for theefficient liquidation of the bank inreceivership and to obtain the maximumamount from the sale of its assets.

(4) A receiver shall not take any deposits.

(5) Within 90 days from the date of appointment, thereceiver may make payments to other creditors of such amounts asin his opinion may appropriately be used for that purpose; provided,however, that creditors who are similarly situated shall be treated inthe same manner.

(6) The receiver may, upon the prior written approval ofthe Central Bank and according to its guidelines -

(a) sell the assets or arrange for the assumptionof liabilities of a bank in receivership on fairterms;

(b) dispose of assets and liabilities of the bankin receivership, including deposit liabilitiesthrough a purchase and assumptiontransaction; or

(c) organise a restructuring of the assets andliabilities of the bank in receivership or

continue viable or necessary operationsthrough a bridge institution.

(7) Deposit liabilities may be acquired by a bank or bridgeinstitution established by the Central Bank for a temporary period ofnot more than 2 years for the purpose of resolving the bank inreceivership.

(8) The Central Bank may extend the temporary period ofexistence of a bank or bridge institution under subsection (1), butany such extension shall not exceed 3 years followed by a furtherextension of one year.

(9) A receiver may request any information from theexisting or previous directors, senior managers, shareholders,employees and its subsidiaries and affiliates or any third parties of abank in receivership who hold information that may be necessary tocarry out their functions.

(10) The Central Bank shall approve or decline a merger ofa bank in receivership with another bank, or sale of substantially allthe assets of a bank in receivership to any one bank, based upon thecriteria in section 35.

(11) Notwithstanding anything contained in this Act, areceiver shall not make any payments to an insured depositor unlessand until the Deposit Protection Fund has completed pay-outs andany re-claims to insured depositors as the case may be.

(12) Where the Deposit Protection Fund makes paymentto an insured depositor which falls short of the deposits made by theinsured depositor the receiver may make payment in relation to theshortfall.

93. (1) Where a receiver has taken possession of a bank inreceivership -

(a) any term, statutory, contractual or otherwiseon the expiration of which a claim or right ofthe bank would expire or be extinguished,shall be suspended;

(b) the calculation of interests and penalties orobligations against the bank shall be

Effects ofreceivership.

102 103


suspended and no other charge or liability shall accrue on theobligations of the bank;

(c) all legal proceedings against the bank arestayed and the exercise of any right on theassets of the bank shall be suspended;

(d) no right of a third party can be exerted overassets during the liquidation and no creditormay attach, sell or take possession of anyassets of the bank as a means of enforcinghis claim or initiate or continue any legalproceeding to recover the debt or perfectsecurity interests.

94. (1) A receiver shall have unrestricted access to andcontrol over the offices, books of account, records and other assetsof the bank in receivership ,its subsidiaries and its financial holdingcompany.

(2) At the request of the receiver, a law enforcement officeror officers shall assist the receiver to gain access to premises orcontrol over records of a bank in receivership.

(3) A receiver shall take any of the following actions tosecure the property, offices, books, records, and assets of a bank inreceivership in order to prevent their dissipation by theft or otherimproper action -

(a) changing the locks and limiting access to thenew keys on external entrances to the officesand on doors to internal offices which containfinancial assets or information or equipmentwhich could enable a person to gain unlawfulaccess to financial assets of a bank inreceivership;

(b) changing or establishing access codes to thecomputers of a bank in receivership andgranting access only to a limited number oftrustworthyemployees;

(c) issuing new photo identification passes forentrance of authorised employees andcontrolling the access of others to thepremises of a bank in receivership;

(d) cancelling authorisations of persons toengage the financial responsibility of a bankin receivership and issuing newauthorisations, as appropriate, and notifyingthird parties;

(e) informing correspondent banks, financialholding companies, registrars andtransferagents of securities and ex t er n a lasset managers of the assets of a bank inreceivership, that persons who previouslyhad authorisation to give instructions onbehalf of the bank with respect to dealing inthe bank's assets or assets held in trust bythe bank are no longer so authorised and thatonly the receiver and persons authorised bythe receiver have such authority;

(f) suspending the payment of capitaldistributions in general and payment of anykind to directors, key management personnel,and significant shareholders of a bank inreceivership; provided, however, that basecompensation may be paid to directors or keymanagement personnel for services renderedin their capacity as directors or keymanagement personnel of the bank; and

(g) any other action that it considers necessary.

(4) A person who willfully interferes with a receiver'saccess to or control over the offices, books of account, other records,and other assets of a bank in receivership for which he has beenappointed commits an offence and is liable on summary convictionto a fine or to a term of imprisonment not less than one year but notexceeding 5 years.

(5) A receiver shall furnish the Deposit Protection Fundwith such information and reports in the form and manner as may bedetermined by the Institution with the approval of the Central Bank.

Takingcontrol ofbank inreceivership.

104 105


95. (1) A receiver shall, within 30 days of taking possessionof a bank in receivership -

(a) make an inventory of the assets and propertyof the bank and transmit a copy thereof tothe Central Bank, which shall make a copyavailable for examination by the public.

(b) establish a new financial position for thebank, based on a determination of liquidationvalues of the bank's assets.

(2) Liabilities shall be deemed due and payable andinterest shall cease to accrue as of the date of the appointment of thereceiver.

(3) Un-matured liabilities shall be discounted to presentvalue at the rate of interest determined by the Central Bank.

96. (1) Within 30 days from the date of appointment, areceiver may repudiate any non-performed or partially performedcontract, to the extent that the fulfilment of such contract isconsidered to be burdensome for the bank in receivership and therepudiation would promote the orderly administration of the bank'saffairs and protect depositors' interest.

(2) Any liability arising from a repudiation undersubsection (1), shall be determined as of the date of repudiation andshall be limited to actual direct damages incurred and shall not includeany damage for lost profits or opportunity or non-monetary damages.

(3) In case of repudiation of a lease contract of immovableand movable property, the owner shall be given 30 days' notice ofthe receiver's intention to repudiate the contract.

97. (1) A receiver may set aside the following transactionsaffecting the assets of a bank in receivership and recover the assetsfrom the transferee or other beneficiary of the transaction if detrimentalto the interest of depositors and other creditors -

(a) gratuitous transfers to, or to persons relatedto, affiliates, insiders or key managementpersonnel of the bank made within 5 yearsprior to the effective date of the receivership;

(b) transactions with affiliates, insiders or keymanagement personnel of the bankconducted within 5 years prior to the effectivedate of the receivership;

(c) gratuitous transfers to third parties madewithin 3 years prior to the effective date ofthe receivership;

(d) transactions in which the considerationgiven by the bank considerably exceeded thereceived consideration, made within 3 yearsprior to the effective date of thereceivership;

(e) a transaction based on a forged or fraudulentdocument that the bank has executed to thedetriment of creditors;

(f) any act done with the intention of all partiesinvolved to withhold assets from bankcreditors, or otherwise impair their rights,within 5 years prior to the effective date ofthe receivership;

(g) transfers of property of the bank or financialholding company to, or for the benefit of, acreditor on account of a debt incurred withinone year prior to the effective date of thereceivership which has the effect ofincreasing the amount that the creditor wouldreceive in a liquidation of the bank: provided,however, that payment of deposits in anamount equal to or less than an amount tobe determined by the Central Bank, in thecase of banks per depositor or for suchamounts as may be determined in accordancewith the Deposit Protection Act shall not besubject to this provision; and

(h) any attachment or security interest, exceptone existing 6 months prior to the effectivedate of the receivership.

Inventory ofassets andnew financialposition.

Repudiationof contracts.

Avoidance ofpre-receiv-ershiptransfer.

106 107


(2) Any action to set aside a transfer under this sectionshall be taken by the receiver within one year following the effectivedate of the receivership.

(3) Notwithstanding anything contained in this section,the receiver may not set aside a payment or transfer by a bank inreceivership if it was made in the ordinary course of business, or if itwas part of a contemporaneous exchange for reasonably equivalentvalue, or to the extent that following the transfer the recipient extendednew unsecured credit to the bank which had not been satisfied bythe bank as of the effective date of the receivership.

(4) Notwithstanding anything contained in this section,the receiver may not set aside a payment or transfer by a bank inreceivership or made pursuant to any power of an official administratorunder this Act.

(5) A receiver may recover property or the value ofproperty transferred by a bank in receivership from a transferee of aninitial transferee only if the second transferee did not give fair valuefor the property and knew or reasonably should have known that theinitial transfer could be set aside under this Act.

(6) A receiver may order that notice of an action to setaside a transfer be recorded in the public records for real estateownership and any other rights in property and a person taking titleto or acquiring any security interest or other interest in such propertyafter the filing of such notice takes his title or interest subject to therights of the bank to recover the property.

98. (1) A parent company, subsidiary, affiliate or associate ofa bank that provides management company services may not alter,refuse or discontinue such services to a bank in receivership, acquirerbank, bridg bank because of its receivership or because the bank hasfailed to pay services prior to receivership.

(2) A lessor of a bank premises, provider of utility servicesincluding, without limitation, a company that supplies electricity,natural gas, water or telecommunication services, internet services,may not alter, refuse or discontinue such services to a bank inreceivership, acquirer, bridge bank or asset management company ofa bank or because the debtor has failed to pay for services prior to itsreceivership.

(3) Upon request of a lessor of a bank premises, serviceprovider or a utility provider, a bank in receivership shall place asecurity deposit in a bank as a condition to the lessor's, serviceprovider or utility company's duty to continue to provide servicesduring the receivership, and any such deposit shall not be requiredin an amount greater than the cost of services provided to the bank inreceivership, acquirer, bridge bank or asset management companyduring the month immediately prior to the effective date of thereceivership.

99. (1) Irrevocable money and securities transfer ordersentered by a bank into a payment or securities settlement systemrecognised as such by the Central Bank shall be legally enforceableand binding on third parties even upon a decision revoking the licenceand appointing a receiver but only if the transfer orders becomeirrevocable before such decision takes effect.

(2) Where a bank enters irrevocable money or securitiestransfer orders into a payment or securities settlement system afterthe decision revoking the licence and appointing a receiver takeseffect and the transfer orders are carried out on the day of suchdecision, the transfer orders shall be legally enforceable and bindingon third parties, unless the receiver proves that the system operatorwas aware of the decision before the transfer orders becameirrevocable.

(3) No provision authorising the setting aside of contractsand transactions entered into before the appointment of a receivertakes effect shall be applied in such a way as to require the unwindingof netting by a payment or securities settlement system recognisedas such by the Central Bank, except however the preservation ofsuch netting shall not prevent the ability of the receiver to recoverassets directly from the transferee or beneficiary.

(4) For the purposes of this section -

(a) a transfer order entered into, a money orsecurities settlement system becomesirrevocable at the time defined by theregulations of that system; and

(b) "netting" means the conversion into one netclaim or one net obligation of claims andobligations resulting from transfer orders

Protection ofpayment,clearing, andsettlementsystems.

Obligationsof lessors ofbankpremises andutilityproviders.

108 109


which a participant or participants in asettlement system either issue to, or receivefrom, one or more other participants in thatsystem with the result that only a net claim or a net obligation remains.

100. (1) The procedure relating to the validity and priority ofclaims, liquidation of bank assets, return of bank customer's propertyand sale of bank assets shall be in such transparent and commerciallyreasonable manner as shall be prescribed by the Central Bank.

(2) Subject to subsection (3) no set-off shall be allowedwith respect to claims acquired towards the bank in receivershipafter the appointment of a receiver takes effect or within 3 monthsbefore such decision.

(3) Claims against a bank in receivership arising fromdeposits shall be set-off against any sum due from a depositor to thebank or financial holding company as of the date on which thelicence is revoked and the receiver is appointed -

(a) automatically, if such sum is matured or pastdue; or

(b) at the option of the depositor, if the sum isnot matured or past due.

101. (1) In determining the rights and obligations between abank in receivership and its contractual counterparties, effect shallbe given to the termination provisions of eligible contracts betweenthe bank and its contractual counterparties.

(2) The Central Bank may order a period of temporarystay on the exercise of the termination provisions of eligible contractsunder subsection (1), subject to such safeguards as the Central Bankshall prescribe to facilitate liquidation of the bank while at the sametime minimizing disruption to the markets for eligible financialcontracts.

(3) The net termination value determined in accordancewith an eligible financial contract between a bank in receivership andits contractual counterparties shall be a claim of the bank on thecounterparty or shall be admitted after its validation as a claim of thecounterparty on the bank.

(4) The Central Bank shall prescribe the types ofcontracts that shall qualify as "eligible financial contracts" undersubsection (2) and which may include a master agreement coveringmore than one type of contract.

(5) For the purposes of this Section-

“net termination value" means the net amountobtained after setting off the mutual obligationsbetween the parties to an eligible financial contractin accordance with its provisions.

102. (1) In any liquidation of a bank in receivership, the assetsof the bank shall be available to meet its liabilities according to thehierarchy of creditors' claims that are available to satisfy unsecuredclaims.

(2) Claims allowed to be paid under subsection (1) shallbe as follows-

(a) necessary and reasonable expenses incurredby the receiver and the Central Bank,including professional fees under Part XII;

(b) insured deposits to the extent of any amountguaranteed to be repaid under the deposit;

(c) uncollateralised credit to a bank by theCentral Bank and guarantees by theGovernment and advances guaranteed bythe Government

(d) uninsured deposits;

(e) wages or salaries earned by an employeenot later than 180 days before theappointment of the receiver, as may bespecified by the Central Bank except forwages and salary earned by a director orkey management personnel and any variablecompensation component;

(f) compensation of employees not coveredunder item (h);

Determinationof claims.

Claimsrelating toeligiblefinancialcontracts.

Priorities inpayment ofclaims.

110 111


(g) credits extended to the bank by the CentralBank until the appointment of the receiver;

(h) credits extended to the bank afterthe appointment of the receiver;

(i) statutory amounts owed to the Governmentor to a municipality, unless the Governmentor municipality consents otherwise;

(j) unsecured credits extended to the bank priorto the appointment of the receiver;

(k) subordinated debt.

(3) Treatment of deficiency claims or under collateralizedclaims, secured by collateral or for which collateral has been pledgedshall be as outlined in the prudential guidelines.

(4) Where the amount available for payment for any classof claims is insufficient to provide payment in full, such claims of thatclass shall be reduced in equal proportions.

(5) After payment of all claims filed, the remainingallowable claims that were not filed within the time specified byreceiver for filing, shall be paid.

(6) Any proceeds remaining after all claims of depositorsand other creditors have been paid shall be distributed among theshareholders of the bank in accordance with their rights.

103. (1) Where the proceeds from the sale of assets of a bankin receivership have been distributed the receiver shall provide areport to the Central Bank that includes a statement of income,expense, sources and the period of receivership.

(2) Any assets of a bank in receivership that is ofimmaterial value that the receiver has been unable to sell or where thecosts of sale would exceed the amount expected to be received in thesale may be abandoned by the receiver or given to a charitableinstitution that promotes public health or education.

(3) The creditor of a bank in receivership shall have noclaim against an asset under subsection (2).

104. The Companies Act or any other enactment relating tocorporate insolvency or liquidation shall not apply to the winding upand liquidation of an insolvent bank.

105. Where a receiver has sufficient reason to believe that anyshareholder, director, key management personnel, attorney,accountant or other professional is engaged or engaging in a criminalor fraudulent activity in relation to the business of a bank inreceivership that receiver shall-

(a) notify the Central Bank immediately; and

(b) institute a civil action to claim damages andrestitution.

106. (1) Notwithstanding anything to the contrary in theCompanies Act, or any other law relating winding up a bank shall notbe voluntarily wound up unless the Central Bank certifies in writingthat the bank is able to meet its obligations in full to the depositorsand creditors as they accrue.

(2) Where the Central Bank, at any stage of the voluntarywinding up considers the bank unable to meets its obligations todepositors or creditors in full the Central Bank shall appoint a receiverto wind up the affairs of that bank in accordance with this Act.

(3) The Central Bank shall issue regulations, rules orguidelines for the winding up of a bank under subsection (2).

PART XIII - ACCOUNTS AND AUDIT

107. (1) A bank or financial holding company shall cause tobe kept proper accounting records with respect to all transactions ofthat bank or financial holding company -

(a) in such form and detail and in accordancewith internationally accepted accountingstandards and such standards as may beprescribed by the Central Bank;

(b) in a manner that gives an accurate and reliableaccount of its transactions and the accountsprepared from the records shall give a true

Relationshipwith otherenactments.

Final reportof receiver toCentral Bank.

Miscellaneousreceivershipprovisions.

Voluntarywinding up.

Maintenanceof accountingrecords.

112 113


and fair view of its state of affairs and itsresults for the accounting period.

(2) Accounting records required to be kept by a bank orfinancial holding company under subsection (1), shall be kept at itsHead Office of the bank or financial holding company for a period ofnot less than 10 years.

(3) Where the accounting records kept by a bank orfinancial holding company with respect to all its transactions, areprepared and kept in such a manner that, in the opinion of the CentralBank, have not been properly prepared and kept, or where a bank orfinancial holding company renders returns in accordance with theprovisions of section 54, which in the opinion of the Central Bank areinaccurate, the Central Bank may appoint a firm of qualifiedaccountants to prepare proper accounting records or render accuratereturns, as the case may be, for the bank or financial holding companyand the cost of preparing the accounts and rendering the returnsshall be borne by that bank or financial holding company.

(4) A bank or financial holding company whichcontravenes this Section is liable to an administrative penalty.

108. (1) A bank or financial holding company shall prepareaudited financial statements in such form and detail in accordancewith such accounting standards as shall be prescribed by the CentralBank.

(2) A bank or financial holding company shall prepare, atthe expiration of each financial year, in respect of the businesstransacted by it with reference to that year audited financial statementson a solo or consolidated basis.

(3) A financial statements required to be prepared by abank or financial holding company under subsection (1) shall beapproved by the board of directors of the bank or financial holdingcompany and signed by at least 2 directors of the bank or financialholding company.

(4) A bank or financial holding company which fails toprepare a financial statement in accordance with this section is liableto pay an administrative penalty.

109. (1) Unless otherwise authorised in writing by the CentralBank a bank or financial holding company shall not later than 3months after the end of its financial year -

(a) cause to be published on its website and inat least 3 daily newspapers with a nation-wide circulation;

(b) exhibit in a conspicuous position in each ofits offices and branches; and

(c) forward to the Central Bank, copies of thebank's or financial holding company's dulysigned audited financial statement.

(2) A published financial statements of a bank or financialholding company shall disclose in detail, administrative penalties asa result of contravention of this Act and any policy guidelines inforce during the financial year in question and the external auditor'sreport shall reflect such contravention.

(3) The financial statement of a bank or financial holdingcompany shall bear on its face the report of an approved externalauditor and shall contain statements on such matters as may bespecified by the Central Bank.

(4) A bank or financial holding company which fails tocomply with any of the requirements of this section is in respect ofeach such failure liable to an administrative penalty for each dayduring which the non-compliance continues.

110 . The Central Bank shall lay down the guidelines to befollowed by banks in respect of accounting policies, practices,presentation of annual accounts, financial statements and disclosureof information in the annual accounts.

111. (1) A bank or financial holding company shall appoint atan annual general meeting a person approved by the Central Bank,in this section referred to as "the approved external auditor," toserve for a period of time as may be determined by the Central Bank.

(2) The Directors of a bank or financial holding companymay appoint the first external auditor of the bank or financial holdingcompany or an external auditor to replace an external auditor who isfor any reason unable to act pending ratification or the appointment

Financialstatements.

Display offinancialstatements.

Guidelines onaccountingstandards.

ExternalAuditor.

114 115


of a new auditor at an annual general meeting or until the CentralBank appoints a new auditor under subsection (5)

(3) The duties of the approved external auditor shall beto prepare for the shareholders, a report upon the financial statementsof the bank or financial holding company and every such report shallcontain statements as to the matters and such other information asmay be prescribed by the Central Bank.

(4) For the purpose of this Section, the approved externalauditor shall be an auditor who is -

(a) a member of a professional accountancybody registered in Sierra Leone;

(b) approved by the Central Bank;

(c) resident in Sierra Leone; and

(d) not disqualified by law from being appointedas an auditor for a body corporate.

(5) A person shall not be eligible for appointment as anexternal auditor, or retain his appointment as an external auditor,unless that person declares any interest that he has in the bank orfinancial holding company or with its significant shareholders ordirectors, to the Central Bank and the Central Bank shall determineupon such declaration whether such interest will compromise theauditor's independence as an auditor of the bank or financial holdingcompany.

(6) Notwithstanding subsection (5) the Central Bank shallnot approve an external auditor's appointment if the bank or financialholding company, a director or significant shareholder has an interestin any business or activity of the external auditor which is likely tocompromise the auditor's independence as an auditor of the bank orfinancial holding company.

(7) Where a bank or financial holding company -

(a) fails to appoint an approved external auditorunder this section; or

(b) at any time, fails to fill a vacancy for suchperson, the Central Bank shall appoint asuitable person for that purpose and shall fixthe remuneration to be paid by the bank orfinancial holding company to such auditor.

(8) An auditor of a bank or financial holding companyshall have a right of access at all times to the accounting recordsincluding computerised and manual files, vouchers, reports and otherdocuments such as minutes book, files and other relevantdocumentary evidence, cash and securities of a bank or financialholding company and shall be entitled to require from directors,managers and officers of the bank or financial holding companysuch information and explanation as he thinks necessary for theperformance of the duties of an auditor.

(9) The report of the external auditor shall be read togetherwith the report of the board of directors of the bank or financialholding company at the annual general meeting of the shareholdersof the bank or financial holding company and 2 copies of each reporttogether with the auditor's analysis of bad and doubtful advances ina form specified by the Central Bank shall be sent to the CentralBank.

(10) Where an external auditor appointed under thissection, in the course of his duties as an auditor of a bank or financialholding company, is satisfied that -

(a) there has been a contravention of this Act orregulation or directive prudential standardor that an offence under any other law hasbeen committed by the bank or financialholding company or any other person; or

(b) the bank or financial holding company isinsolvent or there is a significant risk thatthe bank or financial holding company losseshave been incurred by the bank or financialholding company which materially reduce itscapital funds; or

(c) material weakness exists that threatens the safety and soundness of the bank orfinancial holding company; or

116 117


(d) any irregularity which jeopardises theinterest of depositors or creditors of the bankor financial holding company, or any otherirregularity has occurred, he shallimmediately report the matter to the CentralBank.

(11) An external auditor shall forward to the Central Bank2 copies of the management reports on the bank or financial holdingcompany's activities not later than 3 months after the end of the bankor financial holding company's financial year.

(12) A Report submitted by an external auditor undersubsection (11) shall not be construed as a violation of the externalauditor's professional duty of confidentiality nor constitute groundsfor liability for civil damages.

(13) An external auditor who acts in contravention of orfails deliberately or negligently to comply with any of the provisionsof this section commits an offence and is liable on conviction to afine.

(14) A bank or financial holding company shall notify theCentral Bank of the termination of the appointment of its externalauditor.

(15) A bank or financial holding company shall complywith a request of the Central Bank that the appointment of an externalauditor be revoked.

(16) A bank or financial holding company which fails tocomply with this section shall be liable to an administrative penalty.

112. (1) The Central Bank may at the expense of a bank orfinancial holding company -

(a) require an external auditor to undertake afurther audit or provide additional informationor both as the Central Bank considersnecessary; or

(b) engage an independent external auditor toaudit the whole or part of the accountingrecords of the bank or financial holdingcompany.

113. (1) An external auditor of a bank or financial holdingcompany shall submit to -

(a) the bank or financial holding company, and

(b) the Central Bank, at least once in year, astatutory audit report and a long form auditreport.

(2) An external auditor shall state in the statutory auditreport under subsection (1), whether or not -

(a) the accounts give a true and fair view thestate of affairs of the bank or financial holdingcompany and its results for the period underreview;

(b) the external auditor was able to obtain all theinformation and explanation required for theefficient performance of the external auditor'sduties;

(c) the bank or financial holding company'stransactions are within the powers of thebank or financial holding company; and

(d) the bank or financial holding company hascomplied with the provisions of this Act andany other relevant legislation.

(3) The external auditor shall submit a long form auditreport on the accounts and the affairs of the bank or financial holdingcompany generally and in addition comment on the matters to bespecified in directives made by the Central Bank.

114. The Central Bank may periodically or as it considers itnecessary, arrange meetings between the Central Bank, a bank orfinancial holding company and its external auditor to discuss mattersrelevant to the Central Bank's responsibilities which have arisen inthe course of the statutory audit of that bank or financial holdingcompany including relevant aspects of its business, its accountingand internal control systems, and its annual financial statements andmanagement letter.

Special audit.

Externalauditor’sreport.

Meeting withexternalauditor.

118 119


115. (1) An external auditor of a bank or financial holdingcompany shall cease to act as an external auditor if -

(a) the Central Bank requests the bank orfinancial holding company in writing torevoke the appointment of the externalauditor

(b) the external auditor or a member of theexternal auditor's firm or establishmentbecomes a director of that bank or financialholding company;

(c) the external auditor resigns by notice inwriting to that bank or financial holdingcompany;

(d) the external auditor ceases to qualify undersubsection (4) of section 111 for appointmentas auditor of a bank or financial holdingcompany; or

(e) the external auditor is otherwise removed bya decision taken at an annual generalmeeting of that bank or financial holdingcompany or

(f) the external auditor has served out themaximum period prescribed by the CentralBank for external auditors.

(2) A bank or financial holding company shall complywith a request of the Central Bank that the appointment of its externalauditor be revoked.

(3) An external auditor who does not comply withprovisions of this Section commits an offence and is liable on summaryconviction to a fine or to a term of imprisonment of not less than oneyear or both.

PART XIV - MISCELLANEOUS

116. (1) Where a person is dissatisfied or aggrieved with adecision of the Central Bank he may petition the Central Bank inwriting within 10 working days of the said decision for a review.

(2) The Central Bank shall make a decision on a petitionunder subsection (1) within 6 months after receipt of completeinformation and accordingly inform the petitioner of its decision.

117. (1) Except as otherwise provided in this Act any personwho contravenes any provision of this Act or statutory instrumentsmade under this Act commits an offence and shall be liable onconviction to a fine or to imprisonment for a term not exceeding 2years or both the fine and imprisonment.

(2) Where an offence under this Act is committed by abody of persons, then in the case of a -

(a) body corporate, any person who at the timethe offence was committed was a director,manager or officer of that body corporate;

(b) firm, every person who at the time the offencewas committed was a partner or principalofficer of that firm; or

(c) partnership, every person who at the timethe offence was committed was a partner,shall be deemed to have committed thatoffence and shall be liable to an administrativepenalty;

(3) In any proceedings for an offence under this Act itshall be a defence for the person charged to prove that -

(a) the offence was committed without hisknowledge or connivance; or

(b) he took all reasonable precautions andexercised all due diligence to prevent thecommission of the offence.

Terminationof externalauditor’sappointment. Review of

decisions ofCentral Bank.

Offences.

120 121


(4) Notwithstanding anything contained in this Act orany other law, the Central Bank may compound any offencepunishable under this Act by accepting such sums of money as itthinks fit, not exceeding the maximum fine to which a person wouldhave been liable if he had been convicted of an offence under thisAct.

(5) Where an offence under this Act has beencompounded no proceedings shall be instituted or continued againstsuch person.

118. (1) A person who acquired knowledge in his capacity asdirector, manager, officer, employee or agent of a bank or financialholding company, or as its auditor, inspector, potential bidders,administrator, receiver or liquidator, shall not disclose to any personthe identity, assets, liabilities, transactions or other information inrespect of depositors and any other customer except -

a) with written authorisation of the depositorsand any other customer or the heirs or legalrepresentatives of such depositors and anyother customer;

(b) for the purpose of the performance of hisduties within his scope of employment inconformity with this Act;

(c) when lawfully required to make the disclosureby a court of competent jurisdiction; or

(d) under any law in force in Sierra Leone.

(2) Except in the performance of his duties under this Acta director, manager, officer, employee or agent of a bank or a financialholding company shall during or after his relationship with the CentralBank preserve and aid in preserving secrecy with regard to all mattersrelating to the affairs of a bank or financial holding company and ofany of its customers that may come to his knowledge in theperformance of his duties.

(3) A defaulting customer who refuses to pay his debtsto a bank shall not be covered under this section.

(4) The duty of confidentiality imposed under this sectionshall not apply where a customer -

(a) issued with a credit card or charge card by abank, has had the card suspended orcancelled by that bank by reason of defaultin payment, and the bank disclosesinformation related to the name and identityof the customer, the amount of indebtednessand the date of suspension or cancellationof the credit card or charge card to anotherbank or institution that is issuing credit cardsor charge cards in Sierra Leone;

(b) is declared bankrupt or in case of a companyis insolvent and or being wound up;

122 123

Maintenanceof secrecy.


(c) has died and the information is required bythe appointed personal representative of thedeceased or the testamentary executor solelyin connection with the succession to theestate.

(5) A person who contravenes this section commits anoffence and is liable on conviction to a fine or imprisonment for aterm not exceeding 2 years or both fine and imprisonment.

119. (1) Notwithstanding anything contained in this Act theCentral Bank may publish information obtained by it from a bank ina consolidated form as it considers fit and in the public interest.

120. (1) The Central Bank, its officers, board members,employees, or agents, shall not be liable for, or in respect of, any lossor damage suffered or incurred by any person arising from a decisiontaken or action performed in absence of bad faith in the exercise of afunction, power or duty in terms of this Act.

(2) The Central Bank shall indemnify its officers, Boardmembers, employees, or agents, for any legal costs they incur indefending a legal action under subsection (1).

(3) This section shall not be applicable where the actionor claim arises out of the negligence or a wrongful act of the Boardmembers, employees or agent of the Central Bank.

(4) The Central Bank shall seek reimbursement for anyoutlays in defending against claims where the court ultimately makesa finding that the Central Bank did not act in bad faith".

121. (1) Property held by a bank shall be presumed to beabandoned if the owner has, within a period of 5 years immediatelyafter the date of deposit or payment of funds towards the purchaseof shares or other interests or the issuing instruments or the dateupon which funds held in a fiduciary capacity became payable orcapable of being distributed or the expiration of the period for whicha safe deposit box was rented, as the case may be-

(a) not increased or decreased the amount of thedeposit or funds;

(b) not increased or decreased the principal oraccepted payment of principal or income inrespect of funds held in a fiduciary capacity;

(c) not had any correspondence with the bankconcerned regarding the property;

(d) not otherwise indicated an interest in theproperty as evidenced by a memorandumconcerning them by the bank.

(2) The property referred to in subsection (1) include -

(a) a general deposit (demand, savings ormatured time deposit) made in Sierra Leonewith that bank together with an interest ordividend exc1uding any lawful charges;

124 125

Immunity ofCentral Bank.

Abandonedproperty.

Publicationof data byCentral Bank.


(b) funds paid in Sierra Leone towards thepurchase of shares or other interests in abank together with interest or dividendexcluding any lawful charges.

122. (1) The Central Bank may, after consultation with banks,at any time by notice published in at least one newspaper of generalcirculation in an affected community, fix minimum uniform hours ofbusiness for the branches and offices of banks in any specified area.

(2) The Central Bank may, at any time by a noticepublished in at least one newspaper of general circulation in anaffected community or communities, declare any day to be a bankholiday and directing that no bank shall transact any business withthe public on a bank holiday.

(3) A bank holiday shall not necessarily be a publicholiday.

123. (1) A pecuniary penalty not specifically designated asfine incurred and imposed under this Act shall be deemed to be adebt owed to the Central Bank.

(2) A pecuniary penalty referred to in subsection (1)which has not been paid to the Central Bank may be sued for andrecovered in a court by the Central Bank.

(3) In any suit under this section, production of acertificate signed by the Governor giving the name and address ofthe defendant and the amount of the pecuniary penalty due shall besufficient evidence of the amount owed by the defendant.

126 127

124. Unless otherwise provided in this Act, the Central Bankmay by statutory instrument prescribe a schedule of penalties forviolation of this Act.

125. (1) The Banking Act, 2011 is hereby repealed.

(2) Notwithstanding subsection (1)-

(a) a licence granted under the repealed Act,which is in force at the coming into operationof this Act shall continue in force as if grantedunder this Act;

(b) all regulations, rules, guidelines, orders,notices, directives and instrumentsprescribed or issued under the repealedAct and in force at the coming into operationof this Act shall, unless they are inconsistentwith any provision of this Act or until theyare expressly revoked, remain in force;

(c) a bank in existence before or at thecommencement of this Act carrying onbanking business that is incompatible withthis Act shall within a period of 90 days afterthe coming into operation of this Actregularise its activity to the satisfaction ofthe Central Bank to bring it in conformitywith this Act.

Minimumuniformbusiness hoursand bankholiday.

Civilproceedings.

Schedule ofpenalties.

Repeal andsavings.

act - sierra leone · no. 6 the banking act 2019 no. 6 the banking act 2019 short title. no. 6 2019...

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